UBS Equities-US Equity Strategy _Earnings Brief 1Q24 May 31_ Golub-108467990.pdf

ab31May2024GlobalResearchandEvidenceLabUSEquityStrategyEarningsBrief1Q24:May312QEPSisexpectedtogrow10.5%,versus10.7%in1Q.Notably,fromthispointlastquarterforward,1Qexpectationsimproved600bps.Should2Qreportsprogresssimilarly,EPSgrowthwouldcomeinat16.5%.In1Q,TECH+EPSgrew40.2%,versus1.3%fortherestofthemarket.In2Q,TECH+isexpectedtogrow23.1%,versus6.0%fortherest.98.2%oftheS&P500"smarketcaphasreported.1Qexpectationsareforrevenuestogrow3.8%andEPSby10.7%.Growthamonggroupsvariessignificantly,asshowninthetablebelow(ablendofconsensusestimatesandreportedresultswhereavailable):GroupEPSGrowth(%)TECH+40.2Financials12.3Industrials&DiscexInternetRetail5.4Non-CyclicalexHealthCare6.4HealthCare-2.7Energy&Materials-22.7Source:Standard&Poor’s,Refinitiv,FactSet,UBSEarningsarebeatingestimatesby7.2%inaggregate,with74%ofcompaniestoppingprojections.FirmsbeatingonbothrevenuesandEPSareoutperformingthemarketby0.5%vs.ahistoricalaverageof1.7%,whileonesmissingonbothareunderperformingby-2.9%vs.-3.1%.Figure1:PathofBottom-UpS&P500ConsensusEPS-0.24.0-0.2-2.80.4-5-4-3-2-1012345-64-48-32-16016324864HistoricalTrendp%q1Q24q2Q24ESource:Standard&Poor’s,Refinitiv,FactSet,UBSNote:Historicaltrendbasedonestimatesfrom1Q11-4Q19ThisreporthasbeenpreparedbyUBSSecuritiesLLC.ANALYSTCERTIFICATIONANDREQUIREDDISCLOSURES,includinginformationontheQuantitativeResearchReviewpublishedbyUBS,beginonpage14.UBSdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.EquityStrategyAmericasJonathanGolubStrategistjonathan.golub@ubs.com+1-212-7138673PatrickPalfreyStrategistpatrick.palfrey@ubs.com+1-212-713-2000WillJacksonAssociateStrategistwill.jackson@ubs.com+1-212-713-2000NicholasSamoyednyAssociateStrategistnicholas.samoyedny@ubs.com+1-212-713-2000USEquityStrategy31May2024ab2USEquityStrategyUBSResearchS&P500Figure2:1Q24EarningsDashboard–S&P500WeightedGrowthYoY(%)RevenueMarginsEarningsBuybacksEPSS&P5003.85.39.11.610.7Cyclicals-0.3-10.0-10.32.6-7.7Energy-2.7-23.7-26.42.9-23.5Materials-5.3-15.2-20.50.3-20.2Industrials0.92.73.72.05.7Discretionaryex-InternetRetail2.5-1.41.13.94.9TECH+10.828.038.81.440.2Technology8.217.225.40.826.3InternetRetail12.4157.1169.50.1169.5Media&Internet17.857.775.52.678.0Non-Cyclicals3.0-1.51.60.52.1Staples1.93.85.70.15.7HealthCare5.9-10.3-4.41.7-2.7Utilities-8.725.116.3-2.214.1REITs7.4-3.63.8-4.5-0.7Telecos-0.1-4.2-4.30.9-3.4Financials7.03.210.32.012.3Source:Standard&Poor’s,Refinitiv,FactSet,UBSNote:BlendofactualswhereavailableandestimatesFigure3:1Q24SurpriseDashboard–S&P500Surprise(%)RptdTotalRevenueMarginsEarningsS&P5004905000.86.47.2Cyclicals1741760.14.95.0Energy23232.2-0.21.9Materials2828-0.46.76.3Industrials7878-1.36.75.4Discretionaryex-InternetRetail45470.17.47.5TECH+74771.28.29.3Technology62651.14.65.7InternetRetail660.818.619.3Media&Internet561.914.015.8Non-Cyclicals171176-0.26.26.0St