Here at Bespoke, we track anything and everything earnings related, including the percentage of US companies that raise and lower future earnings estimates during each quarterly reporting period. One key takeaway from the last earnings season was the difference between companies raising and lowering guidance. During the third quarter, 14.6% of companies lowered guidance while just 3% raised guidance. This difference of -11.6% was the worst spread since at least 2001, and was a major reason why companies performed so poorly following their reports. Investors discounted poor future earnings by sending shares sharply lower. With guidance so poor last quarter, investors shouldn't be expecting much this quarter. However, if companies end up reporting earnings that are even worse than what investors are expecting, it's going to be a tough earnings season. But there will be companies that saw their shares fall significantly during the Q4 market selloff that end up reporting better than expected results. These stocks will likely see outsized gains, so be on the lookout for them as earnings season rolls along.
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