Ex-Energy, S&P 500 Reporting a Year-Over-Year Decline in Earnings of 4% for Q2

For Q2 2022, the blended earnings growth rate for the S&P 500 is 6.7%. At the sector level, six sectors are reporting year-over-year growth in earnings for the quarter. However, the Energy sector is reporting the highest earnings growth of all 11 sectors at 299%.

The Energy sector is also the largest contributor to earnings growth for the S&P 500 for Q2 2022. The sector is reporting an aggregate year-over-year increase in earnings of $47.7 billion, while the S&P 500 overall is reporting an aggregate year-over-year increase in earnings of $31.1 billion. In fact, if the Energy sector is excluded, the S&P 500 would be reporting a year-over-year decline in earnings of 3.7% rather than a year-over-year increase in earnings of 6.7%.

Exxon Mobil and Chevron Lead the Energy Sector

At the company level, Exxon Mobil and Chevron are the largest contributors to year-over-year earnings growth for the Energy sector and the S&P 500 as a whole for Q2. Exxon Mobil reported EPS of $4.14 for Q2 2022, compared to EPS of $1.10 for Q2 2021. Chevron reported actual EPS of $5.82 for Q2 2022, compared to EPS of $1.71 for Q2 2021. Combined, these two companies account for about $20.9 billion (44%) of the $47.7 billion year-over-year increase in earnings for the Energy sector.

The Energy sector is also expected to be the largest contributor to earnings growth for the S&P 500 for all of CY 2022. If this sector is excluded, the estimated earnings growth rate for the index for CY 2022 falls to 2.4% from 8.9%.

Falling Oil Prices

Higher year-over-year oil prices contributed to the year-over-year improvement in earnings for this sector in the second quarter, as the average price of oil in Q2 2022 ($108.52) was 64% above the average price in Q2 2021 ($66.17). However, given the sharp decline in the price of oil over the past week (to $88.54 from $98.62), the market will certainly be watching for any continued decrease over the next few weeks. There is a high correlation between changes in the price of oil and changes in future earnings estimates for companies in the Energy sector.

Note: The FactSet Earnings Insight report will not be published on August 12, August 19, and August 26. The next edition of the report will be published on September 2.

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