Earnings Season Update: January 25, 2019

To date, 22% 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 (71%) is equal to the five-year average. In aggregate, companies are reporting earnings that are 3.0% above the estimates, which is below the five-year average. In terms of revenues, the percentage of companies reporting actual revenues above estimates (59%) is below the five-year average. In aggregate, companies are reporting revenues that are 0.2% above the estimates, which is also below 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 10.9% today, which is above the earnings growth rate of 10.6% last week. Positive earnings surprises reported companies in the Industrials and Information Technology sectors were mainly responsible for the small increase in the earnings growth rate during the week. If 10.9% 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 11 sectors are reporting year-over-year earnings growth. Six sectors are reporting double-digit earnings growth, led by the Energy, Industrials, and Communication Services sectors.

The blended, year-over-year revenue growth rate for the fourth quarter is 6.1% today, which is equal to the revenue growth rate of 6.1% last week. Ten of the 11 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 at future quarters, analysts see low, single-digit earnings growth for the first three quarters of 2019.

The forward 12-month P/E ratio is 15.4, which is below the five-year average but above the 10-year average.

During the upcoming week, 126 S&P 500 companies (including 13 Dow 30 components) are scheduled to report results for the fourth quarter.