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

Earnings

By John Butters  |  August 11, 2022

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%.

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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Note: The FactSet Earnings Insight report will not be published on August 12, August 19, and August 26.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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This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.

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John Butters

Vice President, Senior Earnings Analyst

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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The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.