In our first earnings season preview
, we highlighted the fact that the bar is set high for US earnings as Q3 earnings and especially revenue figures were the best since the financial crisis. So far, the numbers out of S&P 500 companies suggest that the bar is high. Revenue per share y/y in % is down from the high growth in Q3, but these are still only preliminary numbers (around 10% of the index has reported earnings).
Most S&P 500 companies have so far beaten expectations on both revenue and earnings, adding further tailwind to the momentum in global equities.
In our previous Earnings Watch
, we highlighted JPMorgan Chase, Netflix and TSMC earnings as the most important to watch. JPMorgan Chase delivered fine numbers and management were quite upbeat on outlook, going against the trend. Netflix Q4 results were in line with estimates but the outlook was below analyst estimates and a tad to the negative side. Our view on Netflix
is cautious given the outlook and the fact that liabilities continue to grow faster than revenue which is problematic as the life span of video streaming content is much shorter than music.
At TSMC, one of Apple’s largest suppliers, projections for Q1 revenue were sharply lower than estimated; in general, the previous double-digit growth rates may slip into negative territory in 2019 unless China and US strike a trade deal in combination with Chinese stimulus.