Featured Image

S&P 500 Companies with More Global Exposure Could See Double-Digit Earnings Decline in Q3

Companies and Earnings

By John Butters  |  September 6, 2019

With a few weeks remaining in the third quarter, there are concerns in the market about the impact of trade tensions and slower global economic growth on companies in the S&P 500 with higher international revenue exposure. Given these concerns, are S&P 500 companies with higher global revenue exposure expected to underperform S&P 500 companies with lower global revenue exposure in terms of earnings growth and revenue growth in Q3 2019?

The answer is yes. S&P 500 companies with higher global revenue exposure are expected to report year-over-year declines in earnings and revenues in Q3 2019, while S&P 500 companies with lower global revenue exposure are expected to report year-over-year growth in earnings and revenues in Q3 2019.

SP500 Estimated Earnings Growth Q32019

FactSet Geographic Revenue Exposure data (based on the most recently reported fiscal year data for each company in the index) was used to answer this question. For this analysis, the index was divided into two groups: companies that generate more than 50% of sales inside the U.S. (less global exposure) and companies that generate less than 50% of sales inside the U.S. (more global exposure). Aggregate earnings and revenue growth rates were then calculated based on these two groups.

The estimated earnings decline for the S&P 500 for Q3 2019 is -3.6%. For companies that generate more than 50% of sales inside the U.S., the estimated earnings growth rate is 0.4%. For companies that generate less than 50% of sales inside the U.S., the estimated earnings decline is -10.7%.

The estimated revenue growth rate for the S&P 500 for Q3 2019 is 2.9%. For companies that generate more than 50% of sales inside the U.S., the estimated revenue growth rate is 4.7%. For companies that generate less than 50% of sales inside the U.S., the estimated revenue decline is -1.7%.

SP500 Estimated Revenue Growth Q32019

What is driving the underperformance of S&P 500 companies with higher global revenue exposure? At the sector level, the Energy and Information Technology sectors are expected to be the largest contributors to the projected earnings and revenue declines for S&P 500 companies with more global exposure in Q3. These two sectors have the highest (Information Technology) and fourth highest (Energy) international revenue exposures at the sector level in the index.

SP500 Aggregate Sector Geographic Revenue Exposure

Download the latest Earnings Insight

John Butters

Senior Earnings Analyst

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.

Comments

Info

We use cookies to personalize content and ads and to analyze our traffic.

We also share information about your use of our site with our advertising and analytics partners. See details.