FxWirePro: S&P 500 earnings update

91 percent of the companies in S&P 500 have reported their Q1 earnings. Let’s take a look at the key takeaways,

Earnings:

• So far, 78 percent of the companies that reported actual results, reported better than expected earnings. Only 22 percent of the companies reported worse than estimated earnings. Average earnings growth rate so far is 24.9 percent, which is higher than 24.2 percent reported last week. This is the highest pace of growth since Q3 2010. After the quarter, S&P500 companies had forecasted 17.1 percent growth. So far, all eleven sectors have beaten that estimate.
• Earnings surprise percentage is at +8.3 percent, which is above the 5-year average of +4.3 percent and the 1-year average of +5.1 percent. This is the highest number since Q4 2010.
• At the sector level, the Health Care (88 percent), and Information Technology (91 percent) sectors have the highest percentages of companies reporting earnings above estimates, while the Real Estate (61 percent) and Telecom Services (50 percent) sectors have the lowest percentage of companies reporting earnings above estimates.

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 lower than 8.5 percent reported last week.
• At the sector level, the Industrials (88 percent), Information Technology (95 percent) sectors have the highest percentages of companies reporting revenues above estimates, while the Utilities (44 percent), and Telecom Services (33 percent) sector has the lowest percentages of companies reporting revenues above estimates.

Q2/Q3/Q4 forecast:

• For Q2 2018, analysts are projecting earnings growth of 18.8 percent and revenue growth of 8.3 percent.
• For Q3 2018, analysts are projecting earnings growth of 20.9 percent and revenue growth of 7.1 percent.
• For Q4 2018, analysts are projecting earnings growth of 16.5 percent and revenue growth of 5.7 percent.

The current forward 12-month P/E ratio for the S&P 500 is at 16.5, lower than its 5-year average of 16.1 and higher than the 10-year average of 14.3

Better than expected earnings in 2017/18 have pushed all three, S&P 500, Dow Jones Industrial Average, and NASDAQ to all-time highs. S&P 500 is currently trading at 2735, while DOW is at 24831, and NASDAQ at 7402.

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