Mid-Check of Q3 Earnings Season: 47% Report Surprise Results

[Asia Economy Reporter Song Hwajeong] As companies continue to announce their third-quarter earnings for this year, it has been revealed that about half of the companies that reported their results recorded earnings surprises.

According to Yuanta Securities on the 30th, among the Universe200 stocks (analyzed stocks), preliminary third-quarter earnings were announced for 66 stocks. As the announcements were mainly made by large-cap stocks, the progress rate based on amount recorded 68.8%. Among the 66 stocks that announced earnings, 31 stocks exceeded expectations, resulting in an earnings surprise ratio of 47.0%. The achievement rate against expectations for the 66 stocks was 97.9%, slightly below the forecast. Samsung Electronics and SK Hynix had achievement rates of 98.8%, while the remaining stocks excluding these two had an achievement rate of 96.7%.

Samsung Electronics slightly exceeded expectations, and SK Hynix announced earnings that surpassed forecasts. In the steel sector, both POSCO and Hyundai Steel recorded earnings surprises, and banks that completed earnings announcements also showed notable earnings surprises across the sector. In the automotive sector, the results of finished car manufacturers Hyundai Motor and Kia Motors generally met expectations, Hyundai Mobis fell short, and Hyundai Glovis exceeded forecasts, showing mixed results. Additionally, LG Electronics, LG Chem, Samsung C&T, GS Construction, and Daewoo Construction fell short of expectations.

Researcher Kim Kwanghyun of Yuanta Securities analyzed, "Recently, domestic stock market earnings have fallen short of expectations, and a virtuous cycle of exceeding raised forecasts has continued. Earnings surprises that began in the second quarter of last year have continued until the last quarter, increasing the reliability of forecasts, which in turn led to stock price increases."

Yuanta Securities estimated third-quarter profits for Universe200 stocks, including preliminary figures, at 61 trillion won. This greatly surpasses the record high profits of 53.5 trillion won in the second quarter. Researcher Kim explained, "Just the profits of the 66 stocks already announced reached 42.7 trillion won, and the remaining 134 stocks have forecasts of 19.8 trillion won, so unless there is a major surprise, the third quarter will remain the highest profit ever."

However, if third-quarter earnings fall short of expectations, the reliability of future forecasts may decline. Researcher Kim said, "In the past three weeks, the annual forecast for this year has been revised down by 6.1 trillion won, and next year's forecast by 10.3 trillion won, with downward revisions confirmed mainly in IT, materials, and consumer discretionary sectors. Most of the earnings announcements for representative stocks in each sector are expected to be completed after next week, so attention should be paid to changes in forecasts based on earnings results."