• FxWirePro: S&P 500 earnings update

    Source: FxWire Pro - Commentary / 20 Aug 2018 09:23:27   America/New_York

    96 percent of the companies in S&P 500 have reported their Q2 earnings. Let’s take a look at the key takeaways,

    Earnings:

    • So far, 78 percent of the companies that reported actual results, reported better than expected earnings. Only 22 percent of the companies reported worse than estimated earnings. Average earnings growth rate so far is 24.5 percent, which is lower than 24.5 percent reported last week. This is the second highest pace of growth since Q3 2010. After the quarter, S&P500 companies had forecasted 20 percent growth. So far, 10 sectors have beaten that estimate.
    • Earnings surprise percentage is at +5.1 percent, which is above the 5-year average of +4.4 percent and below the 1-year average of +5.6 percent.
    • At the sector level, the Telecom services (100%), Healthcare (96%), and Information Technology (90%) sectors have the highest percentages of companies reporting earnings above estimates, while the Energy (45%) sector has the lowest percentage of companies reporting earnings above estimates.

    Sales:

    • 72 percent of the companies reported higher sales than estimated, so far. Sales growth rate is at 9.9 percent, which is higher than 9.8 percent reported last week.
    • At the sector level, the Healthcare (83%), and Information technology (82%) sectors have the highest percentages of companies reporting revenues above estimates, while the Energy (60%), and Consumer Staples (58%) sector has the lowest percentage of companies reporting revenues above estimates.

    Q3/Q4/2018 forecast:

    • For Q3 2018, analysts are projecting earnings growth of 20.3 percent and revenue growth of 7.7 percent.
    • For Q4 2018, analysts are projecting earnings growth of 17.6 percent and revenue growth of 5.9 percent.
    • For Q1 2019, analysts are projecting earnings growth of 7.3 percent and revenue growth of 6.2 percent.

    The current forward 12-month P/E ratio for the S&P 500 is at 16.7, above the 5-year average of 16.2 and higher than the 10-year average of 14.4

    Better than expected earnings in 2017/18 have pushed all three, S&P 500, Dow Jones Industrial Average, and NASDAQ to all-time highs, though the indices have been struggling lately. S&P 500 is currently trading at 2856, while DOW is at 25669, and NASDAQ at 7816.

     

     

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