Earnings Season Update: May 10, 2019

To date, 90% 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 (76%) is above the five-year average. In aggregate, companies are reporting earnings that are 5.5% above the estimates, which is also above the five-year average. In terms of sales, the percentage of companies (59%) reporting actual sales above estimates is equal to the five-year average. In aggregate, companies are reporting sales that are 0.4% above estimates, which is 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) earnings decline for the first quarter is -0.5% today, which is smaller than the earnings decline of -0.9% last week. Positive earnings surprises reported by companies in multiple sectors (led by the Communication Services and Financials sectors) were responsible for the decrease in the overall earnings decline during the week. If -0.5% 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%). Six sectors are reporting year-over-year growth in earnings, led by the Health Care and Utilities sectors. Five sectors are reporting a year-over-year decline in earnings, led by the Energy, Information Technology, and Communication Services sectors.

The blended revenue growth rate for Q1 2019 is 5.3% today, which is slightly above the revenue growth rate of 5.2% last week. Positive revenue surprises reported by companies in the Financial sector were mainly responsible for the slight increase in the overall revenue growth rate during the week. If 5.3% is the final growth rate for the quarter, it will tie the mark for the lowest revenue growth rate for the index since Q2 2017 (also 5.3%). Nine of the 11 sectors are reporting year-over-year growth in revenues, led by the Health Care and Communication Services sectors. Two sectors are reporting a year-over-year decline in revenues, led by the Information Technology sector.

Looking at future quarters, analysts expect a 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 16.5, which is equal to the five-year average but above the 10-year average.

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