To date, 16% 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 (79%) is above the five-year average. In aggregate, companies are reporting earnings that are 7.0% above the estimates, which is also above the five-year average. In terms of sales, the percentage of companies (62%) reporting actual sales above estimates is above the five-year average. In aggregate, companies are reporting sales that are 0.9% above 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) earnings decline for the second quarter is -1.9% today, which is smaller than the earnings decline of -3.1% last week. Positive earnings surprises reported by companies in the Financials and Information Technology sectors were mainly responsible for the decrease in the overall earnings decline during the week. If -1.9% 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 (or are expected to report) year-over-year growth in earnings, led by the Financials sector. Six sectors are reporting a year-over-year decline in earnings, led by the Materials, Information Technology, and Energy sectors.
The blended revenue growth rate for the second quarter is 3.8% today, which is slightly above the revenue growth rate of 3.7% last week. Positive revenue surprises reported by companies in the Financials sector were mainly responsible for the small increase in the overall revenue growth rate during the week. If 3.8% 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 (or are projected to report) 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 mid-single-digit earnings growth in the fourth quarter.
The forward 12-month P/E ratio is 17.0, which is above the five-year average and above the 10-year average.
During the upcoming week, 144 S&P 500 companies (including 10 Dow 30 components) are scheduled to report results for the second quarter.
Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His 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, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).
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