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Earnings Season Update: August 9, 2019

Written by John Butters | Aug 9, 2019

To date, 90% of the companies in the S&P 500 have reported actual results for Q2 2019. In terms of earnings, the percentage of companies reporting actual EPS above estimates (75%) is above the five-year average. In aggregate, companies are reporting earnings that are 5.7% above the estimates, which is also above the five-year average. In terms of sales, the percentage of companies (57%) reporting actual sales above estimates is below the five-year average. In aggregate, companies are reporting sales that are 0.8% above estimates, which is equal to the five-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 second quarter is -0.7% today. If -0.7% is the actual decline for the quarter, it will mark the first time the index has reported two straight quarters of year-over-year declines in earnings since Q1 2016 and Q2 2016. Five sectors are reporting year-over-year growth in earnings, led by the Health Care and Financials sectors. Six sectors are reporting a year-over-year decline in earnings, led by the Materials and Industrials sectors.

The blended revenue growth rate for the second quarter is 4.1% today. If 4.1% is the final growth rate for the quarter, it will mark the lowest revenue growth rate for the index since Q3 2016 (2.7%). Eight sectors are reporting year-over-year growth in revenues, led by the Communication Services and Health Care sectors. Three sectors are reporting a year-over-year decline in revenues, led by the Materials sector.

Looking at the second half of 2019, analysts see a decline in earnings for the third quarter followed by low-single-digit earnings growth in the fourth quarter.

The forward 12-month P/E ratio is 16.7, which is above the five-year average and above the 10-year average.

During the upcoming week, 11 S&P 500 companies (including 2 Dow 30 components) are scheduled to report results for the second quarter.

Author’s Note: Due to technical problems, we unfortunately were unable to publish most of the charts in the FactSet Earnings Insight report for today (August 9). We sincerely apologize for the inconvenience. Due to the author being out of the office, Insight will not be publishing the FactSet Earnings Insight report on August 16 or August 23. The next edition of the report is scheduled on August 30.