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S&P 500 Earnings Season Update: November 2, 2018

Written by John Butters | Nov 3, 2018

For the third quarter to date (with 74% of the companies in the S&P 500 reporting actual results), companies are outperforming recent averages in terms of the number of companies reporting positive surprises and the magnitude of the positive surprises. In terms of earnings, the percentage of companies reporting actual EPS above estimates (78%) is above the 5-year average. In aggregate, companies are reporting earnings that are 6.8% above the estimates, which is also above the 5-year average. In terms of sales, the percentage of companies reporting sales above estimates (61%) is above the 5-year average. In aggregate, companies are reporting sales that are 1.0% above estimates, which is also above the 5-year average.

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 third quarter is 24.9% today, which is above the estimate of 19.3% at the end of the quarter. If 24.9% is the actual growth rate for the quarter, it will mark the second highest earnings growth since Q3 2010. All eleven sectors are reporting year-over-year earnings growth. Nine sectors are reporting double-digit earnings growth, led by the Energy, Financials, Communication Services, and Materials sectors.

The blended, year-over-year sales growth rate for the third quarter is 8.5% today, which is above the estimate of 7.8% at the end of the quarter. All eleven sectors are reporting year-over-year growth in revenues. Five sectors are reporting double-digit growth in revenues, led by the Energy, Communication Services, and Real Estate sectors.

Looking at future quarters, analysts see double-digit earnings growth for the fourth quarter, but also see single-digit earnings growth for the first half of 2019.

The forward 12-month P/E ratio is 15.6, which is below the 5-year average but above the 10-year average.

During the upcoming week, 77 S&P 500 companies (including 1 Dow 30 component) are scheduled to report results for the third quarter.