Given the military conflict in Ukraine and the resurgence of COVID-19 in China, are S&P 500 companies with more international revenue exposure underperforming S&P 500 companies with more domestic revenue exposure in terms of earnings and revenue growth for Q1 2022?
The answer is no. 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. (more domestic exposure) and companies that generate more than 50% of sales outside the U.S. (more international 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 that have yet to report) earnings growth rate for the S&P 500 for Q1 2022 is 6.6%. For companies that generate more than 50% of sales inside the U.S., the blended earnings growth rate is 1.8%. For companies that generate more than 50% of sales outside the U.S., the blended earnings growth rate is 13.5%.
The blended revenue growth rate for the S&P 500 for Q1 2022 is 11.1%. For companies that generate more than 50% of sales inside the U.S., the blended revenue growth rate is 8.9%. For companies that generate more than 50% of sales outside the U.S., the blended revenue growth rate is 16.7%.
What is driving the outperformance of S&P 500 companies with higher international revenue exposure? At the company level, Exxon Mobil, Chevron, and Pfizer are three of the largest contributors to earnings growth and revenue growth for S&P 500 companies with more international exposure. Exxon Mobil generates 62% of revenues outside the United States. Chevron generates 56% of revenues outside the United States. Pfizer generates 63% of revenues outside the United States. If these three companies were excluded, the (blended) earnings growth rate for S&P 500 companies that generate more than 50% of revenues outside the U.S. would fall to 5.1% from 13.5%, while the (blended) revenue growth rate for S&P 500 companies that generate more than 50% of revenues outside the U.S. would fall to 12.5% from 16.7%.
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