Earnings season is well more than 75% complete for the broader markets and for the Alpha DNA equity portfolio. We had 17 portfolio companies report earnings this last week and that brings our overall reported since October 1st to 58 in total. We only have a handful scheduled to report next week and the week after so this is our last report for this earnings season.

We are excited by the market dynamics that we have observed in this most recent earnings season. First and foremost, we are seeing more companies get rewarded for beating expectations - both in our portfolio and across the broader markets. We are also seeing companies get punished in the markets for missing Wall Street expectations. That trend is not new - but the dynamic we can appreciate is seeing it occur on both sides of the earnings continuum. In 2021, market response to earnings outcomes was not consistent. We are happy to see more consistency in those market outcomes in 2022, so far. 

In addition, across the broader markets, we are seeing more mixed earnings results than usual and more mixed guidance. We expect to see many unforeseen demand trends pop up in our economy this quarter and in coming quarters. Why? Because the Fed is intentionally working to constrict the economy to get runaway inflation under control. The Fed is taking these steps immediately following a pandemic that created many surprise demand trends and many unplanned supply chain expansions and contractions. On top of that, we still have full employment conditions. These trends are sure to create strong changes in demand for many products and services in many different sectors. We are very happy that we have a near real time view in to these potential supply and demand changes across nearly 3000 companies.

Our portfolio calls on earnings have not disappointed and have not been as mixed as the broader markets. In fact, our results have been quite strong. Of the 17 portfolio companies that reported this week, only 2 missed on EPS expectations meaning we delivered an 88% success rate on EPS calls in our portfolio. We also had 15 of the 17 companies meet or beat on Revenues which is also an 88% success rate. Overall for the entire reporting cycle, our EPS success rate is at 84% and our Revenue success rate is at 93%! 

Our results compare very favorably to FactSet's tracking for the S&P 500 thru November 4th. FactSet has 75% of the S&P 500 companies meeting or beating on EPS and only 71% of S&P 500 companies met or beat on Revenue. Our results above compare very favorably! 

On the guidance side, the story continues to be positive. Our portfolio has had 16 companies provide upward forward guidance and only 7 companies provide any downward guidance. The ratio of greater than 2:1 makes us proud. The 2 to 1 ratio is lower than our recent quarters but still much better than the broader markets where we have seen marginally more companies provide downward guidance compared to upward guidance.

You can review all of the stocks that announced earnings within our portfolio at this report: Link to Report

As usual, you should look for more green on the report and less red. This report will not disappoint on that front.

If you would like to talk to one of our portfolio managers about these stocks or about the potential earnings results for any stock you maintain in your portfolio, just reach out to us at 443-288-6444 or email us at wayne.ferbert@alphadnaim.com