FxWirePro: S&P 500 earnings update

So far 11 percent of the companies in S&P 500 have reported their Q4 earnings. Let’s take a look at the key takeaways,

Earnings:

• So far, 68 percent of the companies that reported actual results, reported better than expected earnings. Only 32 percent of the companies reported worse than estimated earnings. Average earnings growth rate so far is -0.2 percent, which is lower than 6.3 percent reported in last quarter.
• It was forecasted after the quarter, that growth rate will be 10.8 percent. So far, the financial sector is the only one reporting a decline in earnings.
• Earnings surprise percentage is at -53 percent, which is below the 5-year average of +4.3   percent.
• At the sector level, the Energy (100 percent), Health Care (100 percent), Industrials (89 percent), and Information Technology (86 percent) sectors have the highest percentages of companies reporting earnings above estimates, while the Financials (33 percent) and Materials (50 percent) sectors have the lowest percentage of companies reporting earnings above estimates.
• The new Tax reform is taking a toll on earnings of the financial sector companies. The Financials sector (-97.4 percent) is reporting the largest downside aggregate difference between actual earnings and estimated earnings.

Sales:

• 85 percent of the companies reported higher sales than estimated, so far. Sales growth rate is at 6.9 percent.
• At the sector level, the Consumer Discretionary (100 percent), Energy (100 percent), Health Care (100 percent), and Information Technology (100 percent) sectors have the highest percentages of companies reporting revenues above estimates, while the Materials (50 percent) sector have the lowest percentages of companies reporting revenues above estimates.

The current forward 12-month P/E ratio for the S&P 500 is at 18.4, higher than its 5-year average of 15.9 and 10-year average of 14.2

Better than expected earnings in 2017 have pushed all three, S&P 500, Dow Jones Industrial Average, and NASDAQ to all-time highs. S&P 500 is currently trading at 2807, while DOW is at 26071, and NASDAQ at 7337.

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