S&P 500 Companies With More International Exposure Reporting An Earnings Decline of -5%

Given the stronger U.S. dollar in recent months, are S&P 500 companies with more international revenue exposure reporting lower (year-over-year) earnings and revenues for Q3 compared to S&P 500 companies with more domestic revenue exposure?

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. (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 Q3 2023 is 2.7%. For companies that generate more than 50% of sales inside the U.S., the blended earnings growth rate is 6.8%. For companies that generate more than 50% of sales outside the U.S., the blended earnings decline is -4.7%.

The blended revenue growth rate for the S&P 500 for Q3 2023 is 2.1%. For companies that generate more than 50% of sales inside the U.S., the blended revenue growth rate is 3.6%. For companies that generate more than 50% of sales outside the U.S., the blended revenue decline is -2.0%.

What is driving the underperformance of S&P 500 companies with higher international revenue exposure? At the company level, Chevron, Exxon Mobil, and Pfizer are the largest contributors to the earnings and revenue declines for S&P 500 companies with more international revenue exposure. All three companies have either reported or are projected to report year-over-year declines in EPS of more than 40% and year-over-year declines in revenues of more than 15% for Q3.

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