Although the majority of S&P 500 companies reported earnings above analysts’ expectations, the beats were significantly lower than in more recent quarters.
Profit surprises are normalizing — and that may signal a healthier stock market, say Citi strategists
In short
A majority of S&P 500 companies have managed to report earnings that surpassed analyst expectations this season. However, the margins of these corporate outperformances were significantly smaller than the levels recorded in recent quarters. According to strategists at Citi, this pattern of normalizing profit surprises could ultimately foster a healthier stock market moving forward.
Key points
- Shrinking margins of corporate earnings surprises indicate a shift toward normal market p…: Shrinking margins of corporate earnings surprises indicate a shift toward normal market patterns.
- Citi strategists view the normalization of corporate earnings surprises as a positive mar…: Citi strategists view the normalization of corporate earnings surprises as a positive market sign.
- S&P 500 companies continue to beat consensus projections despite achieving much narrower…: S&P 500 companies continue to beat consensus projections despite achieving much narrower margins.