27four Investment Managers
15th February 2021
Earnings smashing expectations!
US 2020Q4 earnings reports are coming in thick and fast with most large companies reporting upbeat results surpassing what analysts had forecasted. Data compiled by FactSet shows that actual earnings of companies which have released their quarter updates so far (74% of S&P 500 companies) were on average 15.1% above expectations. These impressive numbers are supportive of our bullish stance on US cyclicals.
Strangely, investors received the news with less enthusiasm as the share prices of the majority of companies that reported earnings surprises remained flat post the announcements. We think the lacklustre response was due to investors factoring in the Covid-19 base effect and cautiously pricing in a bumpy economic recovery.