What are we looking for?
After turning our eye to the earnings picture for the S&P 500 this quarter, we're going to shift our focus to what's been happening on the S&P/TSX composite index.
Today, we're concentrating on companies that managed to top the best guesses on the Street with their earnings report. Tomorrow, we'll focus on companies that weren't quite able to hit the marks analysts had chalked up.
The big picture
The calendar of Canadian earnings runs a little later than it does in the U.S., but by this point in the quarter we have a pretty good idea of how companies are doing in aggregate and enough company specific events to make a closer look interesting.
According to Bloomberg, more than 140 companies in the S&P/TSX composite index are on the board for this reporting period.
Earnings overall are down about 50 per cent compared with the same time a year ago. This is a much weaker showing than south of the border - earnings there are down around 15 per cent - but the difference is largely attributable to U.S. financials posting outsize returns relative to a very bad period of time a year ago.
In the energy sector, most companies are still in the black but earnings declines are running at a 70-per-cent clip. In the materials group, the decline is a little more than 50 per cent versus a year ago.
More about today's screen
We'll use Bloomberg data to crunch the earnings and estimate numbers. Share price data is from Globe Investor.
What we are looking for are companies in the S&P/TSX composite index that have already reported this quarter. We'll keep an eye on the actual and year-ago profit as well as the earnings growth rate and we'll see how that per-share profit stacked up against the consensus analyst estimate.
Because some companies in the Canadian benchmark index are not as well covered as tends to be the case south of the border, we'll only look at those companies that have at least three analyst estimates feeding into the consensus number. By narrowing our focus to companies that rolled past estimates - the positive earnings surprises - we can get a read on those companies which had their house in better order than expected.
What we found
Precision Drilling Trust rose to the top of the list, easily surpassing the consensus estimate this time out, but the story beneath the beat on an earnings per share basis was a little more subtle. Looking at all the metrics they track, analysts seemed to peg this as a quarter in which Precision came in just ahead of where they expected it to be. Its fiscal house is in markedly better shape, margins were stronger than expected and the outlook was positive, but the sector still looks weak. The quarterly results were enough to give the shares a lift, but also serve to drive home the point that you need to do your homework before making an investment decision.
Also making the cut from the energy sector were ARC Energy Trust, Talisman Energy Inc. and Trican Well Service Ltd.
Insurers Fairfax Financial Holdings Ltd. and Intact Financial Corp. also made the list.