May 25, 2018

This Week in Earnings 18Q1 | May 25

by David Aurelio

Last Update: May 25, 2018

Tajinder Dhillon contributed to this report.

To download the full This Week in Earnings report click here.

Aggregate Estimates and Revisions

  • First quarter earnings are expected to increase 26.3% from Q1 2017. Excluding the energy sector, the earnings growth estimate declines to 24.4%.
  • Of the 485 companies in the S&P 500 that have reported earnings to date for Q1 2018, 78.1% have reported earnings above analyst expectations. This is above the long-term average of 64% and above the average over the past four quarters of 75%.
  • First quarter revenue is expected to increase 8.3% from Q1 2017. Excluding the energy sector, the revenue growth estimate declines to 7.9%.
  • 75.6% of companies have reported Q1 2018 revenue above analyst expectations. This is above the long-term average of 60% and above the average over the past four quarters of 69%.
  • For Q2 2018, there have been 59 negative EPS preannouncements issued by S&P 500 corporations compared to 42 positive, which results in an N/P ratio of 1.4 for the S&P 500 Index.
  • The forward four-quarter (2Q18 – 1Q19) P/E ratio for the S&P 500 is 16.7.
  • During the week of May 28, nine S&P 500 companies are expected to report quarterly earnings.

18Q1 Earnings Growth Highlights

The energy sector has the highest earnings growth rate (85.8%) of any sector. It is expected to earn $15.4B in Q1 2018, compared to earnings of $8.3B in Q1 2017. Five of the six sub-industries in the sector are anticipated to see higher earnings than a year ago. The oil & gas exploration & production (5,496.8%) and oil & gas equipment & services (188.6%) sub-industries have the highest EPS growth in the sector. If these sub-industries are removed, the growth rate declines to 35.4%.

The information technology sector has the second highest earnings growth rate (35.9%) of any sector. It is expected to earn $75.8B in Q1 2018, compared to earnings of $55.8B in Q1 2017. Twelve of the 13 sub-industries in the sector are anticipated to see higher earnings than a year ago. The internet software & services (63.9%) and semiconductor equipment (54.5%) sub-industries have the highest EPS growth in the sector. If these sub-industries are removed, the growth rate declines to 30.5%.

The real estate sector has the lowest growth rate (3.1%) of any sector. It is expected to earn $7.2B in Q1 2018, relative to earnings of $7.0B in Q1 2017. Three of the eight sub-industries in the sector are anticipated to see earnings decreases compared to Q1 2017, led by the office REITs (-10.0%) and health care REITs (-2.9%) sub-industries. If these sub-industries are removed, the growth rate improves to 6.0%.

18Q2 Earnings Growth Highlights

First quarter earnings are expected to increase 20.0% from Q2 2017. Excluding the energy sector, the earnings growth estimate declines to 16.7%.

The energy sector has the highest earnings growth rate (132.4%) of any sector. It is expected to earn $18.3B in Q2 2018, compared to earnings of $7.9B in Q2 2017. All six sub-industries in the sector are anticipated to see higher earnings than a year ago. The oil & gas exploration & production (1,840.3%) and oil & gas drilling (114.1%) sub-industries have the highest EPS growth in the sector. If these sub-industries are removed, the growth rate declines to 83.3%.

The materials sector has the second highest earnings growth rate (29.3%) of any sector. It is expected to earn $8.3B in Q2 2018, compared to earnings of $6.4B in Q2 2017. Ten of 11 sub-industries in the sector are anticipated to see higher earnings than a year ago. The copper (218.2%) and steel (68.7%) and sub-industries have the highest EPS growth in the sector. If these sub-industries are removed, the growth rate declines to 19.7%.

The utilities sector has the lowest growth rate (-0.4%) of any sector. It is expected to earn $8.4B in Q2 2018, relative to earnings of $8.4B in Q2 2017. One of the four sub-industries in the sector is anticipated to see earnings decreases compared to Q2 2017, led by the electric utilities (-3.6%) and multi utilities (1.8%) sub-industries. If these sub-industries are removed, the growth rate improves to 34.0%.

Exhibit 1: S&P 500: Estimate Revisions by Sector

Exhibit 2: S&P 500: Estimate Revisions History

Source: Thomson Reuters I/B/E/S

Exhibit 3: All U.S. Companies: Estimate Revisions by Sector

Exhibit 4: All U.S. Companies: Estimate Revisions History

Source: Thomson Reuters I/B/E/S

Please note: if you use our earnings data, please source Thomson Reuters I/B/E/S

You can find additional earnings reports in the stories linked below:

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