To date, 15% of the companies in the S&P 500 have reported actual results for Q1 2019. In terms of earnings, the percentage of companies reporting actual EPS above estimates (78%) is above the 5-year average. In aggregate, companies are reporting earnings that are 5.7% above the estimates, which is also above the 5-year average. In terms of sales, the percentage of companies (53%) reporting actual sales above estimates is below the 5-year average. In aggregate, companies are reporting sales that are 0.4% above estimates, which is also below the 5-year average.
The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings decline for the first quarter is -3.9% today, which is smaller than the earnings decline of -4.3% last week. Positive earnings surprises reported by companies in the Financials sector were mainly responsible for the decrease in the overall earnings decline during the week. If -3.9% is the actual decline for the quarter, it will mark the first time the index has reported a year-over-year decline in earnings since Q2 2016 (-3.2%) and it will mark the largest year-over-year decline in earnings since Q1 2016 (-6.9%). Three of the eleven sectors are reporting (or are expected to report) year-over-year growth in earnings, led by the Health Care and Utilities sectors. Eight sectors are reporting a year-over-year decline in earnings. Three of these eight sectors are reporting a double-digit decline in earnings: Energy, Materials, and Information Technology.
The blended revenue growth rate for Q1 2019 is 5.0% today, which is equal to the revenue growth rate of 5.0% last week. If 5.0% is the final growth rate for the quarter, it will mark the lowest revenue growth rate for the index since Q4 2016 (also 5.0%). Ten of the 11 sectors are reporting (or are projected to report) year-over-year growth in revenues, led by the Communication Services and Health Care sectors. The only sector reporting a year-over-year decline in revenues is the Information Technology sector.
Looking at future quarters, analysts expect a slight decline in earnings in the second quarter, low single-digit earnings growth in the third quarter, and high single-digit earnings growth in the fourth quarter.
The forward 12-month P/E ratio is 16.8, which is above the 5-year average and above the 10-year average.
During the upcoming week, 150 S&P 500 companies (including 12 Dow 30 components) are scheduled to report results for the first quarter.
John’s weekly research report, Earnings Insight provides analysis and commentary on trends in corporate earnings data for the S&P 500, including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.