S&P 500 Earnings Season Update: January 19

To date, 11% of the companies in the S&P 500 have reported actual results for Q4 2017. In terms of earnings, fewer companies are reporting actual EPS above estimates (68%) compared to the five-year average. In aggregate, companies are reporting earnings that are 53.0% below the estimates, which is well below the five-year average. In terms of sales, more companies (85%) are reporting actual sales above estimates compared to the five-year average. In aggregate, companies are reporting sales that are 0.9% above estimates, which is also above the five-year average.

Sector Level Breakdown

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 -0.2% today, which is much lower than the earnings growth rate of 10.0% last week. Negative earnings surprises reported by companies in the Financials sector (due to charges and expenses related to the tax law) were responsible for the sharp decrease in the earnings growth rate for the index during the past week. Despite the overall earnings decline, 10 sectors are reporting or are predicted to report year-over-year earnings growth. Four of these sectors are reporting or are expected to report double-digit earnings growth: Energy, Materials, Information Technology, and Utilities. On the other hand, the Financials sector is the only sector reporting a year-over-year decline in earnings.

The blended sales growth rate for the third quarter is 6.9% today, which is slightly above the sales growth rate of 6.8% last week. Positive revenue surprises and upward revisions to sales estimates recorded by companies in the Information Technology, Health Care, and Energy sectors were mainly responsible for the small uptick in the revenue growth rate for the index during the week. All 11 sectors are reporting or are projected to report year-over-year growth in revenues. Three sectors are reporting double-digit growth in revenues: Energy, Materials, and Information Technology. The Telecom Services and Financials sectors are reporting the lowest revenue growth for the quarter.

Looking at future quarters, analysts currently project earnings to grow at double-digit levels through 2018.

The forward 12-month P/E ratio is 18.4, which is above the five-year average and the 10-year average.

During the upcoming week, 79 S&P 500 companies (including nine Dow 30 components) are scheduled to report results for the fourth quarter.

 For more, download the complete Earning Insight report.