As of Friday, 57% of the companies in the S&P 500 have reported actual earnings and sales numbers for the second quarter. Of these companies, 73% have reported sales above estimates and 27% have reported sales below estimates. How does this 73% number compare to recent averages?
During the past year (four quarters), 56% of the companies in the S&P 500 have reported sales above the mean estimate on average. During the past five years (20 quarters), 53% of companies in the S&P 500 have reported sales above the mean estimate on average. Thus, the percentage of companies reporting sales above estimates to date for Q2 2017 is running well above both the trailing one-year average and the trailing and five-year average.
If 73% is the final percentage for the quarter, it will mark the highest percentage of companies reporting sales above estimates for a quarter since FactSet began tracking the data in Q3 2008. The current record for the highest percentage for a quarter is 72%, set in Q2 2011.
At the sector level, the Telecom Services (100%), Energy (88%), Materials (85%), and Information Technology (84%) sectors have the highest percentages of companies reporting revenues above estimates to date.
Companies are also beating revenue estimates by wider margins than average for the second quarter. In aggregate, companies are reporting actual sales that are 1.2% above expectations. This percentage is well above the trailing one-year average (+0.5%) and the trailing five-year average (+0.5%).
At the sector level, the Energy (+4.2%) and Financials (+2.3%) sectors are reporting the largest upside aggregate differences between actual sales and estimated sales.
Because of the number and magnitude of these upside surprises, the blended revenue growth rate for the quarter has increased to 5.2% today from 4.9% on June 30. The chart on the following page provides a breakdown of the revenue growth rates as of today and as of June 30 by sector.
John’s 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, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.