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What's Driving Q1 Estimates Higher?

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Including all of this morning’s results, we now have Q4 results from 322 S&P 500 members that combined account for 78.1% of the index’s total market capitalization. Total earnings for these companies are up +15% from the same period last year on +9.2% higher revenues, with 79.8% beating EPS estimates and 77% beating revenue estimates.

The comparison charts below compare results from these 322 index members with what these same companies had reported in other recent periods.

Looking at Q4 as a whole, combining the actual results from the 322 index members that have come out with estimates for the 178 still-to-come companies, total earnings are expected to be up +13.9% from the same period last year on +8.2% higher revenues. This will be the highest quarterly growth pace in almost 5 years, eclipsing the +13.5% growth in 2017 Q1. The growth momentum is broad-based, with 7 sectors having double-digit earnings growth, including Energy, Technology, Basic materials, Industrials and others.

Estimates for 2018 Q1  and the coming quarters are going up in a significant way, as the chart below shows

The biggest driver for this uptrend is the tax law changes, but other elements are at play as well. The recent rise in interest rates that has the market spooked is a net positive for banks and the Energy sector as a whole.

For more details about the ongoing Q4 earnings season, please check out our weekly Earnings Trends report here >>>> Standout Features of the Q4 Earnings Season

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