July 13, 2018

This Week in Earnings 18Q2 | Jul. 13

by David Aurelio.

Last Update: Jul. 13, 2018

Tajinder Dhillon contributed to this report.

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

Aggregate Estimates and Revisions

  • Second quarter earnings are expected to increase 20.9% from Q2 2017. Excluding the energy sector, the earnings growth estimate declines to 17.1%.
  • Of the 27 companies in the S&P 500 that have reported earnings to date for Q2 2018, 85.2% 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%.
  • Second quarter revenue is expected to increase 8.1% from Q2 2017. Excluding the energy sector, the revenue growth estimate declines to 7.0%.
  • 85.2% of companies have reported Q2 2018 revenue above analyst expectations. This is above the long-term average of 60% and above the average over the past four quarters of 72%.
  • For Q2 2018, there have been 72 negative EPS preannouncements issued by S&P 500 corporations compared to 54 positive, which results in an N/P ratio of 1.3 for the S&P 500 Index.
  • The forward four-quarter (3Q18 – 2Q19) P/E ratio for the S&P 500 is 16.6.
  • During the week of Jul. 16, sixty S&P 500 companies are expected to report quarterly earnings.

18Q2 Earnings Growth Highlights

The energy sector has the highest earnings growth rate (145.1%) of any sector. It is expected to earn $19.7B in Q2 2018, compared to earnings of $8.0B in Q2 2017. All of the six sub-industries in the sector are anticipated to see higher earnings than a year ago. The oil & gas exploration & production (1,852.9%) and oil & gas drilling (115.7%) sub-industries have the highest EPS growth in the sector. If these sub-industries are removed, the growth rate declines to 92.7%.

The materials sector has the second highest earnings growth rate (33.5%) of any sector. It is expected to earn $7.4B in Q2 2018, compared to earnings of $5.5B in Q2 2017. Ten of the 11 sub-industries in the sector are anticipated to see higher earnings than a year ago. The copper (208.1%) and fertilizers & agricultural chemicals (151.3%) sub-industries have the highest EPS growth in the sector. If these sub-industries are removed, the growth rate declines to 21.3%.

The utilities sector has the lowest growth rate (1.6%) of any sector. It is expected to earn $8.7B in Q2 2018, relative to earnings of $8.6B in Q2 2017. One of the four sub-industries in the sector are anticipated to see earnings decreases compared to Q2 2017, led by the electric utilties (-1.3%) and multi-utilties (3.5%) sub-industries. If these sub-industries are removed, the growth rate improves to 34.1%.

18Q3 Earnings Growth Highlights

Third quarter earnings are expected to increase 23.2% from Q3 2017. Excluding the energy sector, the earnings growth estimate declines to 20.0%.

The energy sector has the highest earnings growth rate (103.7%) of any sector. It is expected to earn $21.3B in Q3 2018, compared to earnings of $10.4B in Q3 2017. All six sub-industries in the sector are anticipated to see higher earnings than a year ago. The oil & gas exploration & production (1,906.4%) and oil & gas drilling (198.2%) sub-industries have the highest EPS growth in the sector. If these sub-industries are removed, the growth rate declines to 65.1%.

The financials sector has the second highest earnings growth rate (44.5%) of any sector. It is expected to earn $62.3B in Q3 2018, compared to earnings of $43.1B in Q3 2017. Nine of 10 sub-industries in the sector are anticipated to see higher earnings than a year ago. The property & casualty insurance (8,288.9%) and multi-sector holdings (77.0%) and sub-industries have the highest EPS growth in the sector. If these sub-industries are removed, the growth rate declines to 34.0%.

The real estate sector has the lowest growth rate (4.8%) of any sector. It is expected to earn $7.7B in Q3 2018, relative to earnings of $7.3B in Q3 2017. One of the eight sub-industries in the sector is anticipated to see earnings decreases compared to Q3 2017, led by the health care REITs (-6.6%) and residential REITs (0.7%) sub-industries. If these sub-industries are removed, the growth rate improves to 8.1%.

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

Exhibit 2: S&P 500: Estimate Revisions History

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

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

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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