Priced in? Stocks That Top Estimates Are Falling During This Earnings Season

Source: NYSE

Many companies are turning in stronger-than-expected quarterly earnings, but that's doing nothing to boost their stock prices.

In fact, the 67 S&P 500 companies that have beaten bottom-line earnings estimates this reporting season have actually averaged a one-day drop of 0.62% in their shares following the release, according to data from Bespoke Investment Group.

That's a far cry from the long-term average gain of 1.86% following earnings beats the last 15 years, the Wall Street research firm said.

It shows the bar is particularly high for earnings to lift stocks higher after an impressive rally to record highs this year. Many argued that much of the good news on the corporate earnings side has already been priced into the market.

The S&P 500 has rallied more than 10% in 2021 and more than 50% the last 12 months, coming off a fresh all-time high just on Friday.

So far in the first-quarter earnings season, S&P 500 companies are reporting a 23% upside to analysts' earnings expectations on average, according to CNBC calculations.

Many analysts are shrugging off the first-quarter results and instead are focused on the forward guidance companies are putting out as they continue to recover from the pandemic damage.

"It appears the economy is now well on its way to recovery. Still, earnings guidance early in the current reporting season appears to lean more conservative than our economic projections suggest," said Scott Wren, Wells Fargo's senior global market strategist.

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