FxWirePro: S&P 500 earnings update

So far 97 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, 74 percent of the companies that reported actual results, reported better than expected earnings. Only 26 percent of the companies reported worse than estimated earnings. Average earnings growth rate so far is 14.8 percent, which is same as 14.8 percent reported last week. This is the highest pace of growth since Q3 2011. After the quarter, S&P500 forecasted 11 percent growth. So far, ten sectors have beaten that estimate.
• All eleven sectors are reporting better than expected earnings growth, with energy sector leading the way.
• Earnings surprise percentage is at +4.4 percent, which is above the 5-year average of +4.3            percent, but lower than last week’s +4.6 percent.
• At the sector level, the Materials (88 percent), Health care (83 percent), and Information Technology (IT) sectors have the highest percentages of companies reporting earnings above estimates, while the Real Estate (48 percent), and Telecom (33 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, but lifting earnings of others.

Sales:

• 77 percent of the companies reported higher sales than estimated, so far, which is the highest reading since at least 2008. Sales growth rate is at 8.2 percent, which is higher than 6.7 percent estimate.
• At the sector level, the Health Care (87 percent), and IT (89 percent) sectors have the highest percentages of companies reporting revenues above estimates, while the Utilities (43 percent) sector has the lowest percentages of companies reporting revenues above estimates.

The current forward 12-month P/E ratio for the S&P 500 is at 16.7, higher than its 5-year average of 16 and 10-year average of 14.3

Better than expected earnings in 2017 have pushed all three, S&P 500, Dow Jones Industrial Average, and NASDAQ to all-time highs, though they have corrected recently. S&P 500 is currently trading at 2676, while DOW is at 24538, and NASDAQ at 7258.

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest