Companies That Miss Earnings Expectations Are Getting Punished By The Market

Companies That Miss Earnings Expectations Are Getting Punished By The Market
Andrew Rummer

over 2 years ago1 min

Mentioned in story

As the third-quarter earnings season gets into full swing, the vast majority of US companies are beating analysts’ expectations – but woe betide any that fail to make the grade.

Of the 96 members of the S&P 500 who have reported results so far, 82% have beaten earnings per share (EPS) estimates, according to Bloomberg data. But, as the chart above shows, the few that missed expectations have been punished hard. 

Oil services firm Baker Hughes, for example, slid nearly 6% on Wednesday after profits missed estimates. And IBM dropped 5% in pre-market trading on Thursday as both earnings and revenue disappointed.

Overall, companies that missed Wall Street’s profit projections have dropped 4.4% more than the benchmark S&P 500 the next day, the most since Bloomberg began tracking the data in 2017. Those that managed to beat estimates only outperformed the S&P 500 by 0.2%.

Keep your fingers crossed that your favorite stocks don’t slip up this quarter: the market is unlikely to be lenient.

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