It’s not your imagination–this is the worst earnings season since 2005

Materials have been hit hardest

Chart showing trailing 10-year ratio of negative earnings “surprises”
Does it seem like corporate Canada is rolling out more negative news this earnings season than usual? This chart proves you’re not just imagining it.

Fourth quarter earning season is nearing he half way mark and there is a noticeable uptick in the number of companies missing analyst expectations. With 114 of the 240 companies on the S&P/TSX Composite reporting, 56% have fallen short of analyst earnings expectations, according to data from Bloomberg. To put that figure in context over the past decade this figure is typically has typically been around 45%.

The material sector appears to be having a particularly rough quarter. Of those companies in this space reporting so far, more than two-thirds have missed analyst estimates. The list of companies reporting negative surprises includes some of Canada’s pretty big names, like Teck Resources, Eldorado Gold and Potash Corp. of Saskatchewan.

Even the mighty Canadian financial sector is feeling the pinch. Of the 21 companies reporting so far there are 10 beats, 8 misses and 2 companies that matched the street. For the same period a year ago three quarter of the financials met or beat the street. With another 25 financial companies, including the big banks, which have yet to report, there is still time for this sector to turn things around, but it’s not off to a good start.

Still, there have already been some notable financials missing expectations this quarter, including AGF Management, Great-West Lifeco and Intact Financial. In the case of Intact, the company missed estimates by 15 cents a share.

With about half the Composite yet to report, things could still get better; but if the trend holds this is on pace to be the worst earnings season in Canada since the first quarter of 2005.