DM Americas Earnings: A Sector View

May 04, 2023
By Knowledge Leaders Team in Markets, News

With approximately 80% of companies in the S&P 500 reporting, now is a good time to take a look at how developed market Americas (US and Canada) large cap stocks faired on a sector level.

To construct our stock universe we take 70% of the highest market cap stocks in North America and add a 100% earnings surprise ceiling and floor to limit the effects of outliers.

First, let’s look at communication services. Ten out of 11 companies beat earnings expectations with the largest beat coming from Activision Blizzard. Topline sales saw only 7 of 11 companies beat expectations, a relatively weak outcome compared with other sectors as we’ll see.

Communication Services:

The real outperformer this quarter and surprise was the consumer discretionary sector. Every consumer discretionary stock beat earnings. Some analysts had expected a slowdown in consumer spending in Q1. On average, companies in the sector beat expectations by 24.04%, a remarkable achievement in the face of looming macroeconomic stress.

Consumer Discretionary:

Consumer staples saw all but two companies coming out ahead of expectations, with Kimberly-Clark and Archer-Daniels Midland winning out in the group in terms of beating earnings estimates.

Consumer Staples:

Energy saw all companies bearing out their expectations, returning an average 11% beat, despite lower energy prices in the quarter after surging prices last year.


Financials, unsurprisingly, was a mixed bag. Twenty-five percent of companies missed earnings. Large diversified banks like JPMorgan and others that benefitted from deposit flight from smaller banks benefitted from the maelstrom in the regional bank industry group.


Health care saw a higher percentage of earnings beat with 20 of 23 companies beating earnings estimates. Moderna in particular saw a much higher beat than its peers with a 58% beat on its top-line sales figure.

Health Care:

Industrials saw 22 out of 24 companies reporting an earnings beat. GE had the biggest earnings and sales beat in the quarter. Despite economists’ worries about a recession in the later part of the year this cyclical sector had a positive quarter overall.


Information technology saw each company in our large cap basket beating earnings expectations, with Intel beating its semiconductor peers in North America.

Information Technology:

Multiple materials stocks had high earnings beats, with the top five beating earnings estimates by 20%. The top two stocks in the materials sectors were gold producers, not surprising considering the precious metal’s vertiginous rise in recent months.


Real estate had some major misses, with American Tower and Prologis missing by double digits. Equinix was a real outlier; given its orientation toward cloud computing and data centers, it may have been largely isolated from the fallout in real estate more broadly which has been hurt by higher mortgage rates and office space vacancy rates.

Real Estate:

Utilities provided double digit beats in three names and a large sales beat with Sempra’s top-line beat.


As of 3/31/23, Activision Blizzard, Amphenol, Arista Networks, Becton, Dickinson and Co., Boston Scientific Corporation, Bristol-Myers Squibb, Corteva, Danaher Corporation, Eaton Corp., Eli Lily & Co, Emerson Electric Co., Gilead Sciences, Keurig Dr Pepper, Lam Research, MercadoLibre, Qualcomm, Roper Technologies, Stryker, and Thermo Fisher Scientific Inc. were held in the Knowledge Leaders Strategy.





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