In the third quarter, it was no longer good enough for companies to meet or exceed earnings expectations. Due to a year's worth of cost-cutting, which inflated earnings without demonstrating any real improvement in the underlying operations, earnings no longer meant a whole lot. Investors and analysts now wanted to see an improvement in revenue as well.
By the end of the earnings season, companies delivered relatively upbeat revenues, but the so-called "beat rate" -- that is, the percentage of companies topping revenue expectations -- was nothing to get excited about.
In the fourth quarter, though, companies seem to be delivering. According to Bespoke Investment Group, the current beat rate for revenues sits at an impressive 72 per cent. That's the highest level since the fourth quarter of 2004.
The results on Tuesday from Dow Chemical Co. complicate these figures a bit. The earnings news was upbeat, with the company returning to profitability in the fourth quarter after a big loss last year. The company topped expectations with profit of 18 cents a share, versus expectations for 12 cents a share.
However, in terms of revenue, the picture is a little murkier, which might explain why the shares were down 3.6 per cent in late-morning trading. Overall, sales were up 15 per cent, thanks in part to a 27 per cent gain in the Asia-Pacific region. But North American sales fell 19 per cent and European sales fell 3.7 per cent.