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Chicago, IL – July 19, 2018 – Zacks Director of Research Sheraz Mian says, “For the S&P 500 index as a whole, total Q2 earnings are expected to be up +19% from the same period last year on +8.1% higher revenues, with 11 of the 16 Zacks sectors expected to have double-digit earnings growth.”
Positive Start to Q2 Earnings Season
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
• Total earnings for the 48 S&P 500 members that have reported Q2 results are up +23% on +10% higher revenues. The proportion of these companies beating EPS and revenue estimates is tracking above other recent periods.
• Total earnings for the 41.9% market cap of the Finance sector that has reported already are up +20.9% on +5.8% higher revenues, with 80% beating EPS estimates and 86.7% beating revenue estimates.
• With results from more than one-third of the sector’s total market cap in the S&P 500 index out, the Transportation sector is onto a strong showing, with +22.4% and +9.5% earnings and revenue growth and all the companies beating EPS and revenue estimates.
• For the S&P 500 index as a whole, total Q2 earnings are expected to be up +20.4% from the same period last year on +8.3% higher revenues, with 11 of the 16 Zacks sectors expected to have double-digit earnings growth.
• Tech sector earnings are expected to be up +23.5% on +11% higher revenues, which would follow +31.1% earnings growth on +13.1% revenue growth in Q1. Finance sector earnings are expected to be up +24.2% from the same period last year on +4.1% higher revenues.
• Other major sectors with strong expected growth in Q2 include Energy (+136.9% earnings growth), Basic Materials (+52.3%), Industrial Products (+25.3%) and Retail (+18.3%). The Autos and Conglomerates sectors are the only ones expected to have lower Q2 earnings compared to the year-earlier level.
• For the small-cap S&P 600 index, total Q2 earnings are expected to be up +26.1% on +8.2% higher revenues, which would follow +24.3% earnings growth on +8.6% revenue growth in 2018 Q1.
• For full-year 2018, total earnings for the S&P 500 index are expected to be up +20.3% on +6.3% higher revenues. For full-years 2019 and 2020, total earnings are expected to be up +9.8% and +9.7%, respectively. Revenues for the index are expected to be increase by +4.8% in 2019, and +4.3% in 2020.
• The implied ‘EPS’ for the index, calculated using current 2018 P/E of 17.6X and index close, as of July 17th, is $156.42. Using the same methodology, the index ‘EPS’ works out to $171.78 for 2019 (P/E of 16X) and $188.44 for 2020 (P/E of 14.6X). The multiples for 2018, 2019 and 2020 have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.
Q2 earnings season Scorecard
Total earnings for the 48 index members that have reported Q2 results are up +23% on +10% higher revenues, with 89.6% beating EPS estimates and 83.3% beating revenue estimates.
This is a very strong showing from these 48 S&P 500 members relative to other recent periods, particularly with respect to the proportion of positive EPS and revenue surprises.
The Finance sector is typically heavily represented at the start of every reporting cycle and that’s the case at present as well. Including today’s strong Morgan Stanley (MS - Free Report) report, we now have Q2 results from 41.9% of the sector’s total market capitalization in the S&P 500 index. Total earnings for these Finance sector companies are up +20.9% on +5.8% higher revenues, with 80% beating EPS estimates and 86.7% beating revenue estimates.
The proportion of these banks beating estimates and the growth pace is tracking below what we had seen from the same banks in the preceding earnings season (2018 Q1), but better than other historical averages.
Q2 Expectations as a Whole
Combining the actual results from the 48 index members with estimates for the still-to-come 452 companies, total Q2 earnings are expected to be up +20.4% from the same period last year on +8.3% higher revenues, with double-digit earnings growth for 11 of the 16 Zacks sectors, including Finance and Technology. This would be the 3rd quarter in a row of double-digit earnings growth for the index, a trend that is currently expected to continue in the second half of the year as well.
Energy sector earnings are expected to more than double from the year-earlier level, up +136.9%. Excluding the Energy sector, Total Q2 earnings for the rest of the index would be up +17%.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: Morgan Stanley
For Immediate Release
Chicago, IL – July 19, 2018 – Zacks Director of Research Sheraz Mian says, “For the S&P 500 index as a whole, total Q2 earnings are expected to be up +19% from the same period last year on +8.1% higher revenues, with 11 of the 16 Zacks sectors expected to have double-digit earnings growth.”
Positive Start to Q2 Earnings Season
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
• Total earnings for the 48 S&P 500 members that have reported Q2 results are up +23% on +10% higher revenues. The proportion of these companies beating EPS and revenue estimates is tracking above other recent periods.
• Total earnings for the 41.9% market cap of the Finance sector that has reported already are up +20.9% on +5.8% higher revenues, with 80% beating EPS estimates and 86.7% beating revenue estimates.
• With results from more than one-third of the sector’s total market cap in the S&P 500 index out, the Transportation sector is onto a strong showing, with +22.4% and +9.5% earnings and revenue growth and all the companies beating EPS and revenue estimates.
• For the S&P 500 index as a whole, total Q2 earnings are expected to be up +20.4% from the same period last year on +8.3% higher revenues, with 11 of the 16 Zacks sectors expected to have double-digit earnings growth.
• Tech sector earnings are expected to be up +23.5% on +11% higher revenues, which would follow +31.1% earnings growth on +13.1% revenue growth in Q1. Finance sector earnings are expected to be up +24.2% from the same period last year on +4.1% higher revenues.
• Other major sectors with strong expected growth in Q2 include Energy (+136.9% earnings growth), Basic Materials (+52.3%), Industrial Products (+25.3%) and Retail (+18.3%). The Autos and Conglomerates sectors are the only ones expected to have lower Q2 earnings compared to the year-earlier level.
• For the small-cap S&P 600 index, total Q2 earnings are expected to be up +26.1% on +8.2% higher revenues, which would follow +24.3% earnings growth on +8.6% revenue growth in 2018 Q1.
• For full-year 2018, total earnings for the S&P 500 index are expected to be up +20.3% on +6.3% higher revenues. For full-years 2019 and 2020, total earnings are expected to be up +9.8% and +9.7%, respectively. Revenues for the index are expected to be increase by +4.8% in 2019, and +4.3% in 2020.
• The implied ‘EPS’ for the index, calculated using current 2018 P/E of 17.6X and index close, as of July 17th, is $156.42. Using the same methodology, the index ‘EPS’ works out to $171.78 for 2019 (P/E of 16X) and $188.44 for 2020 (P/E of 14.6X). The multiples for 2018, 2019 and 2020 have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.
Q2 earnings season Scorecard
Total earnings for the 48 index members that have reported Q2 results are up +23% on +10% higher revenues, with 89.6% beating EPS estimates and 83.3% beating revenue estimates.
This is a very strong showing from these 48 S&P 500 members relative to other recent periods, particularly with respect to the proportion of positive EPS and revenue surprises.
The Finance sector is typically heavily represented at the start of every reporting cycle and that’s the case at present as well. Including today’s strong Morgan Stanley (MS - Free Report) report, we now have Q2 results from 41.9% of the sector’s total market capitalization in the S&P 500 index. Total earnings for these Finance sector companies are up +20.9% on +5.8% higher revenues, with 80% beating EPS estimates and 86.7% beating revenue estimates.
The proportion of these banks beating estimates and the growth pace is tracking below what we had seen from the same banks in the preceding earnings season (2018 Q1), but better than other historical averages.
Q2 Expectations as a Whole
Combining the actual results from the 48 index members with estimates for the still-to-come 452 companies, total Q2 earnings are expected to be up +20.4% from the same period last year on +8.3% higher revenues, with double-digit earnings growth for 11 of the 16 Zacks sectors, including Finance and Technology. This would be the 3rd quarter in a row of double-digit earnings growth for the index, a trend that is currently expected to continue in the second half of the year as well.
Energy sector earnings are expected to more than double from the year-earlier level, up +136.9%. Excluding the Energy sector, Total Q2 earnings for the rest of the index would be up +17%.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.