Why US Companies Always Seem To Beat Earnings Expectations

Why US Companies Always Seem To Beat Earnings Expectations
Andrew Rummer

about 3 years ago1 min

Investors who watch closely when the companies they hold shares in report quarterly earnings may have noticed something odd: American firms always seem to exceed analysts’ estimates. 

As the chart above shows, US companies are adept at setting themselves up for success in the earnings game. Around three-quarters will beat expectations in an average quarter. 

But, like the boy who cried wolf, in recent quarters the market seems to be ignoring these supposed successes – and investors are selling shares even when profits top Wall Street’s projections.

Stocks drop even after reporting good earnings

So don’t be too surprised if your favorite US stock drops next time it reports results – even if the numbers are superficially impressive.

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