FxWirePro: S&P 500 Q2 earnings update

So far, 44 percent of the companies in the S&P500 have reported their Q2 earnings. Let’s take a look at the key takeaways,

Earnings:

• So far, 77 percent of the companies that reported actual results, reported better than expected earnings. Only 23 percent of the companies reported worse than estimated earnings. Average earnings growth rate so far is -2.6 percent, which is lower than -0.4 percent last quarter and lower than 13.1 percent reported in Q4 and 25.7 percent before that. It is the second negative earnings growth since Q2 2016. After the quarter, S&P500 companies had forecasted -2.7 percent growth. This quarter, 5 sectors have higher growth than the estimate.
• Earnings surprise percentage is at +5.4 percent, which is higher than the 5-year average of +4.8 percent and higher than the 1-year average of +5.2 percent.
• At the sector level, the Health Care (100 percent), Real Estate (86 percent), and Consumer Staples (85 percent) sectors have the highest percentages of companies reporting earnings above estimates, while the Utilities (67 percent) sector has the lowest percentage of companies reporting earnings above estimates.

Sales:

• 61 percent of the companies reported higher sales than estimated, so far. The sales growth rate is at 4 percent, lower than 5.3 percent reported last quarter.
• At the sector level, the Health Care (84 percent) sector has the highest percentages of companies reporting revenues above estimates, while the Materials (15 percent) sector has the lowest percentage of companies reporting revenues above estimates.

2019 forecast:

• For Q3 2019, analysts are projecting earnings growth of -1.9 percent and revenue growth of 3.2 percent.
• For Q4 2019, analysts are projecting earnings growth of 4.9 percent and revenue growth of 4.4 percent.
• For Q1 2020, analysts are projecting earnings growth of 9.2 percent and revenue growth of 5.9 percent.
• For Q2 2020, analysts are projecting earnings growth of 12.6 percent and revenue growth of 6.6 percent.

The current forward 12-month P/E ratio for the S&P 500 is at 17.1, above the 5-year average of 16.5 and higher than the 10-year average of 14.8

S&P 500 is currently trading at 2750, while DOW is at 24815 and NASDAQ at 7450.