S&P 500 Earnings-Beat Rate Rises to 75% After Apple GainCecile Daurat and Kevin Miller
Apple Inc. and Facebook Inc. posted earnings that topped analysts’ estimates, benefiting from expansion strategies and joining industrial companies such as Boeing Co. that are being lifted by a strengthening economy.
Delta Air Lines Inc. and General Dynamics Corp. also helped push the percentage of companies in the Standard & Poor’s 500 stock index beatings estimates to 75 percent so far this season, data compiled by Bloomberg show.
Of 158 companies reporting so far, industrial firms topped expectations most broadly at 89 percent. Indicators released this week signaled the pace of U.S. economic growth may be poised to snap back and global companies are also being aided by a rebound in the Euro area. Boeing, the world’s largest planemaker, was buoyed by rising commercial-jet deliveries as it stepped up its production pace.
“The U.S. today is in a midst of an industrial/manufacturing renaissance,” said Brian Wesbury, chief economist at First Trust Portfolios LP in Wheaton, Illinois, which supervises $88 billion in assets.
Technology companies also are doing better than average within the S&P 500, with 79 percent exceeding estimates. Cupertino, California-based Apple sold more iPhones than analysts projected after making the device available through China’s largest wireless carrier, China Mobile Ltd., this year.
Facebook blew past sales and earnings forecasts, aided by its push into mobile devices. Mobile now account for 59 percent of Facebook’s advertising revenue, up from almost nothing at its 2012 initial public offering.
Delta, the third-largest U.S. airline, was the first major carrier to report results and probably will outperform peers, according to Kevin Crissey, an analyst at Skyline Research LLC. Increased traffic and lower fuel prices trumped winter storms that grounded 17,000 flights at the Atlanta-based carrier.
Of S&P 500 companies that have reported so far, Facebook, Falls Church, Virginia-based Northrop Grumman Corp. and Delta were among the 20 biggest positive earnings surprises.
At Procter & Gamble Co., the world’s largest consumer-products company, Chief Executive Officer A.G. Lafley is making progress on trimming costs. Reviving sales growth has proved harder: Quarterly revenue fell 0.2 percent, trailing predictions.
Among earnings that came short today were Evercore Partners Inc. and Biogen Idec Inc., the Cambridge, Massachusetts-based maker of multiple sclerosis drug Tecfidera. Even so, both companies were optimistic about their prospects. Roger Altman, Evercore’s executive chairman, said it’s “evident that the M&A environment is becoming healthier,” and Biogen boosted its annual profit forecast range.
EMC Corp. gave a more pessimistic view. The world’s biggest maker of storage computers cut its earnings forecast for 2014 after reporting a drop in first-quarter profit.
Companies have been downgrading expectations coming into the season and analysts now estimate S&P 500 earnings rose 0.7 percent last quarter, according to data compiled by Bloomberg. That’s down from a 1.9 percent increase a month ago.
“Lots of analysts have an overly pessimistic macroeconomic view,” said Wesbury, who was the eighth-best forecaster for the U.S. economy in the first quarter, according to Bloomberg Rankings. “That’s causing estimates overall to be lower than they should.”
Tomorrow’s results include General Motors Co., Caterpillar Inc., United Parcel Service Inc., Aetna Inc., Verizon Communications Inc., Time Warner Cable Inc., Potash Corp. of Saskatchewan Inc., Eli Lilly & Co., Raytheon Co. and 3M Co., before the markets open, followed by Microsoft Corp., Amazon.com Inc. and Starbucks Corp. later in the day.