December 14, 2018

This Week in Earnings 18Q3 | Dec. 14

by David Aurelio and Tajinder Dhillon.

Last Update: Dec. 14, 2018

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

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

Aggregate Estimates and Revisions

  • Third quarter earnings are expected to increase 28.3% from Q3 2017. Excluding the energy sector, the earnings growth estimate declines to 25.0%.
  • Of the 500 companies in the S&P 500 that have reported earnings to date for Q3 2018, 77.2% 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 77%.
  • Third quarter revenue is expected to increase 8.6% from Q3 2017. Excluding the energy sector, the revenue growth estimate declines to 7.4%.
  • 61.6% of companies have reported Q3 2018 revenue above analyst expectations. This is above the long-term average of 60% and below the average over the past four quarters of 73%.
  • For Q4 2018, there have been 70 negative EPS preannouncements issued by S&P 500 corporations compared to 47 positive, which results in an N/P ratio of 1.5 for the S&P 500 Index.
  • The forward four-quarter (18Q4 – 19Q3) P/E ratio for the S&P 500 is 15.5.
  • During the week of Dec. 17, 14 S&P 500 companies are expected to report quarterly earnings.

18Q3 Earnings Growth Highlights

The estimated earnings growth rate for the S&P 500 for 18Q3 is 28.3%. If the energy sector is excluded, the growth rate declines to 25%. The S&P 500 expects to see share-weighted earnings of $357.7B in 18Q3, compared to share-weighted earnings of $278.7B (based on the year-ago earnings of the current 505 constituents) in 17Q3.

All of the 11 sectors in the index expect to see an improvement in earnings relative to 17Q3. The energy and financials sectors have the highest earnings growth rates for the quarter, while the real estate sector has the weakest anticipated growth compared to 17Q3.

The energy sector has the highest earnings growth rate (114.6%) of any sector. It is expected to earn $22.6B in 18Q3, compared to earnings of $10.5B in 17Q3. 6 of the 6 sub-industries in the sector are anticipated to see higher earnings than a year ago. The oil & gas exploration & production (1469%) and oil & gas drilling (235.7%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 69.6%.

The financials sector has the second highest earnings growth rate (44.7%) of any sector. It is expected to earn $62.7B in 18Q3, compared to earnings of $43.4B in 17Q3. 12 of the 12 sub-industries in the sector are anticipated to see higher earnings than a year ago. The property & casualty insurance (216.4%) and multi-line insurance (150.7%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 36.9%.

The real estate sector has the lowest earnings growth rate (5.3%) of any sector. It is expected to earn $7.5B in 18Q3, compared to earnings of $7.2B in 17Q3. 1 of the 8 sub-industries in the sector are anticipated to see lower earnings than a year ago. The health care reits (-5.2%) and residential reits (1.6%) sub-industries have the lowest earnings growth in the sector. If these sub-industries are removed, the growth rate improves to 8.3%.

18Q4 Earnings Growth Highlights

The estimated earnings growth rate for the S&P 500 for 18Q4 is 16.1%. If the energy sector is excluded, the growth rate declines to 13.9%. The S&P 500 expects to see share-weighted earnings of $344.6B in 18Q4, compared to share-weighted earnings of $296.7B (based on the year-ago earnings of the current 505 constituents) in 17Q4.

Ten of the 11 sectors in the index expect to see an improvement in earnings relative to 17Q4. The energy and industrials sectors have the highest earnings growth rates for the quarter, while the utilities sector has the weakest anticipated growth compared to 17Q4.

The energy sector has the highest earnings growth rate (70.8%) of any sector. It is expected to earn $19.8B in 18Q4, compared to earnings of $11.6B in 17Q4. 5 of the 6 sub-industries in the sector are anticipated to see higher earnings than a year ago. The oil & gas drilling (1627.6%) and oil & gas exploration & production (123.3%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 58.8%.

The industrials sector has the second highest earnings growth rate (24.6%) of any sector. It is expected to earn $32.6B in 18Q4, compared to earnings of $26.1B in 17Q4. 16 of the 17 sub-industries in the sector are anticipated to see higher earnings than a year ago. The trucking (73.4%) and aerospace & defense (59.7%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 15.6%.

The utilities sector has the lowest earnings growth rate (-9.5%) of any sector. It is expected to earn $7.3B in 18Q4, compared to earnings of $8.1B in 17Q4. 3 of the 4 sub-industries in the sector are anticipated to see lower earnings than a year ago. The independent power producers & energy traders (-26.3%) and electric utilities (-9.7%) sub-industries have the lowest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to -7.1%.

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

Additional index earnings reports on Lipper Alpha Insight:

S&P 500 Earnings Dashboard

S&P 400 MidCap Earnings Dashboard

S&P 600 SmallCap Earnings Dashboard

TSX Composite Earnings Dashboard

STOXX 600 Earnings Outlook

See which North American companies StarMine predicts will beat and miss 18Q3 earnings:

StarMine Models Pick North American Companies for 18Q3 Earnings Beats

StarMine Models Pick North American Companies for 18Q3 Earnings Misses

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