The blended earnings growth rate for the S&P 500 for the third quarter is 2.2%. At the sector level, four sectors are reporting year-over-year growth in earnings for the quarter. However, the Energy sector is reporting the highest earnings growth of these four sectors at 134%.
All five sub-industries in the Energy sector are reporting year-over-year earnings growth for the third-quarter, with four of these five sub-industries reporting earnings growth at or above 90%: Oil & Gas Refining & Marketing (269%), Integrated Oil & Gas (140%), Oil & Gas Exploration & Production (105%), and Oil & Gas Equipment & Services (91%).
The Energy sector is also the largest contributor to earnings growth for the S&P 500 for Q3 2022. The sector is reporting an aggregate year-over-year increase in earnings of $33.0 billion, while the S&P 500 overall is reporting an aggregate year-over-year increase in earnings of only $10.1 billion. In fact, if the Energy sector is excluded, the S&P 500 would be reporting a year-over-year decline in earnings of 5.1% rather than a year-over-year increase in earnings of 2.2%. This would mark the second consecutive quarter in which the index would be reporting a year-over-year decline in earnings excluding the Energy sector.
This sector is also expected to be the largest contributor to earnings growth for the S&P 500 for all of CY 2022. If the Energy sector is excluded, the index is expected to report a year-over-year decline in earnings of 0.6% rather than a year-over-year increase in earnings of 6.1%.
However, it is important to note that analysts predict the Energy sector will be a positive contributor to earnings growth for the index for only two more quarters (Q4 2022 and Q1 2023). From Q2 2023 through Q4 2023, analysts project the Energy sector will report year-over-year declines in earnings. Thus, starting in Q2 2023, the Energy sector is expected to be a detractor rather than a contributor to overall earnings growth for the index.
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