Featured Image

S&P 500 Companies with More Global Exposure Reporting Double-Digit Earnings Decline in Q2

Earnings

By John Butters  |  July 29, 2019

Coming into the Q2 earnings season, there were concerns in the market about the impact of the stronger U.S. dollar, slower global economic growth, and trade tensions on companies in the S&P 500 with higher international revenue exposure. Now that more than 40% of the companies in the index have reported actual results for Q2, are S&P 500 companies with higher global revenue exposure underperforming S&P 500 companies with lower global revenue exposure in terms of earnings growth and revenue growth for Q2 2019?

The answer is yes. 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 blended (combines actual results for companies that have reported and estimated results for companies yet to report) earnings decline for the S&P 500 for Q2 2019 is -2.6%. For companies that generate more than 50% of sales inside the U.S., the blended earnings growth rate is 3.2%. For companies that generate less than 50% of sales inside the U.S., the blended earnings decline is -13.6%.

SP 500 Earnings Growth q2 2019

 

Revenue Growth S&P 500

The blended revenue growth rate for the S&P 500 for Q2 2019 is 4.0%. For companies that generate more than 50% of sales inside the U.S., the blended revenue growth rate is 6.4%. For companies that generate less than 50% of sales inside the U.S., the blended revenue decline is -2.4%.

SP 500 Revenue Growth Q2 2019

What is driving the underperformance of S&P 500 companies with higher global revenue exposure? At the sector level, the Industrials and Information Technology sectors as the largest contributors to the earnings decline for S&P 500 companies with more global exposure, while the Materials and Energy sectors are the largest contributors to the revenue decline for S&P 500 companies with more global exposure. The Information Technology (#1), Materials (#2), and Energy (#4) sectors are three of the four sectors with the highest international revenue exposures in the S&P 500.

Download the latest Earnings Insight

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).

Comments

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.