S&P 500 Earnings Season Update: July 27, 2018

To date, 53% of the companies in the S&P 500 have reported actual results for Q2 2018. In terms of earnings, more companies are reporting actual EPS above estimates (83%) compared to the five-year average. If 83% is the final number, it will mark the highest percentage of S&P 500 companies reporting a positive EPS surprise for a quarter since FactSet began tracking this metric in Q3 2008. In aggregate, companies are reporting earnings that are 2.5% above the estimates, which is below the five-year average. In terms of sales, more companies (73%) 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), year-over-year earnings growth rate for the second quarter is 21.3% today, which is above the earnings growth rate of 20.8% last week. Positive EPS surprises reported by companies in multiple sectors (led by Health Care and Consumer Discretionary) were the largest contributors to the increase in the earnings growth rate over the past week. All 11 sectors are reporting year-over-year earnings growth. Eight sectors are reporting double-digit earnings growth, led by the Energy, Materials, Telecom Services, and Information Technology sectors.

The blended, year-over-year sales growth rate for the second quarter is 9.3% today, which is above the revenue growth rate of 9.0% last week. Positive sales surprises reported by companies in the Health Care, Information Technology, and Industrials sectors were the largest contributors to the increase in the revenue growth rate over the past week. All 11 sectors are reporting year-over-year growth in revenues. Four sectors are reporting double-digit growth in revenues: Energy, Materials, Information Technology, and Real Estate.

Looking at future quarters, analysts currently project earnings growth to continue at about 20% through the remainder of 2018. However, they predict lower growth in the first half of 2019.

The forward 12-month P/E ratio is 16.7, which is above the five-year average and above the 10-year average.

During the upcoming week, 140 S&P 500 companies (including five Dow 30 components) are scheduled to report results for the second quarter.