Earnings Season Update February 15, 2019

To date, 79% of the companies in the S&P 500 have reported actual results for Q4 2018. In terms of earnings, the percentage of companies reporting actual EPS above estimates (70%) is below the five-year average. In aggregate, companies are reporting earnings that are 3.5% above the estimates, which is also below the five-year average. In terms of revenues, the percentage of companies reporting actual revenues above estimates (62%) is above the five-year average. In aggregate, companies are reporting revenues that are 1.1% above the estimates, which is also above the five-year average.

The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report), year-over-year earnings growth rate for the fourth quarter is 13.1% today, which is slightly below the earnings growth rate of 13.2% last week. Negative earnings surprises reported by companies in the Financials sector were mainly responsible for the small decrease in the earnings growth rate during the week. If 13.1% is the actual growth rate for the quarter, it will mark the first time the index has not reported earnings growth above 20% since Q4 2017. However, it will also mark the fifth straight quarter of double-digit earnings growth for the index. Ten of the eleven sectors are reporting year-over-year earnings growth. Five sectors are reporting double-digit earnings growth, led by the Energy, Communication Services, and Industrials sectors.

The blended, year-over-year revenue growth rate for the fourth quarter is 7.0% today, which is equal to the revenue growth rate of 7.0% last week. All eleven sectors are reporting year-over-year growth in revenues. Three sectors are reporting double-digit growth in revenues: Communications Services, Real Estate, and Energy.

Looking ahead, analysts predict a decline in earnings for the first quarter (-2.2%) of 2019 and low single-digit growth in earnings for the second (1.0%) and third quarters (2.4%) of 2019.

The forward 12-month P/E ratio is 16.0, which is below the five-year average but above the 10-year average.

During the upcoming week, 49 S&P 500 companies (including 1 Dow 30 component) are scheduled to report results for the fourth quarter.