As of today, the S&P 500 is reporting a year-over-year decline in earnings of -3.7%. Despite the overall earnings decline for the index, five sectors are reporting year-over-year earnings growth, led by the Consumer Discretionary sector at 47.8%.
However, just one company in this sector accounts for more than 70% of the net year-over-year increase in earnings for the sector: Amazon.com.
On April 27, Amazon.com reported actual (GAAP) EPS of $0.31 compared to the mean (GAAP) EPS estimate of $0.21 and year-ago (GAAP) EPS of -$0.38. On a dollar-level basis, the company reported net income of $3.2 billion for Q1 2023 compared to a net loss of -$3.8 billion in Q1 2022. It should be noted that the company recorded a pre-tax (valuation) loss of $0.5 billion in Q1 2023 compared to a pre-tax (valuation) loss of $7.6 billion in Q1 2022.
Due to this substantial year-over-year increase in earnings, Amazon.com is the largest contributor to earnings growth for the Consumer Discretionary sector for Q1 2023. If this company were excluded, the blended earnings growth rate for the sector would fall to 10.9% from 47.8%.
Amazon.com is also expected to be the largest contributor to earnings growth for the Consumer Discretionary sector for all of 2023. The mean (GAAP) EPS estimate for Amazon.com for 2023 is $1.55, compared to year-ago (GAAP) EPS of -$0.27. Again, if this company were excluded, the estimated earnings growth rate for the Consumer Discretionary sector for 2023 would fall to 10.1% from 27.2%.
It is interesting to note that Amazon.com is also the largest contributor to earnings growth for the entire S&P 500 for Q1 and 2023. If this company were excluded, the (blended) earning decline for the S&P 500 for Q1 2023 would increase to -5.1% from -3.7%, while the estimated earnings growth rate for the S&P 500 for CY 2023 would fall to 0.2% from 1.2%.
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