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S&P 500 Earnings Season Update: January 17, 2020

Earnings

By John Butters  |  January 17, 2020

To date, 9% of the companies in the S&P 500 have reported actual results for Q4 2019. In terms of earnings, the percentage of companies reporting actual EPS above estimates (72%) is equal to the five-year average. In aggregate, companies are reporting earnings that are 1.1% above the estimates, which is below the five-year average. In terms of sales, the percentage of companies (63%) reporting actual sales above estimates is above the five-year average. In aggregate, companies are reporting sales that are 1.4% above estimates, which is also above the five-year average.

The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings decline for the fourth quarter is -2.1%, which is larger than the earnings decline of -2.0% last week. Positive earnings surprises and upward revisions to EPS estimates recorded by companies in the Health Care and Industrials sectors were offset by downward revisions to estimates for companies in the Energy sector, resulting in little change in the overall earnings decline for the week. In the Financials sector, positive and negative EPS surprises reported by companies within the sector also offset, resulting in little impact to the overall growth rate for the index during the week. If -2.1% is the actual decline for the quarter, it will mark the first time the index has reported four straight quarters of year-over-year declines in earnings since Q3 2015 through Q2 2016. Five sectors are reporting (or are expected to report) year-over-year growth in earnings, led by the Utilities sector. Six sectors are reporting a year-over-year decline in earnings, led by the Energy, Consumer Discretionary, and Materials sectors.

S&P 500 Earnings Above In Line Below Estimates

S&P 500 Earnings Growth

The blended revenue growth rate for the third quarter is 2.7%, which is slightly above the revenue growth rate of 2.6% last week. Positive revenue surprises reported by companies in the Financials sector were mainly responsible for the small increase in the overall revenue growth rate during the week. If 2.7% is the actual growth rate for the quarter, it will mark the lowest revenue growth rate for the index since Q3 2016 (also 2.7%). Eight sectors are reporting (or are projected to report) year-over-year growth in revenues, led by the Health Care, Utilities, and Communications Services sectors. Three sectors are reporting a year-over-year decline in revenues, led by the Materials sector.

S&P 500 Revenues Above In Line Below Estimates

S&P 500 Revenue Growth

Looking ahead, analysts see mid-single-digit earnings growth for Q1 2020 and Q2 2020.

The forward 12-month P/E ratio is 18.6, which is above the five-year average and above the 10-year average.

During the upcoming week, 58 S&P 500 companies (including six Dow 30 components) are scheduled to report results for the fourth quarter.

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John Butters

Vice President, Senior Earnings Analyst, Investor Relations

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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