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 Q1 earnings for the 343 S&P 500 companies that have reported results already are up +24% from the same period last year on +9.5% higher revenues, with 78.4% beating EPS estimates and 75.8% beating revenue estimates.
- Except for the proportion of these 343 index members beating revenue estimates, which is tracking below the preceding quarter’s level, performance in Q1 is better than what we have seen in other recent periods in terms of growth and positive EPS surprises.
- Looking at Q1 as a whole, total earnings are expected to be up +23.1% from the same period last year on +8.6% higher revenues, the highest quarterly earnings growth pace in 7 years.
- Earnings growth is expected to be in double-digit territory from the year-earlier level for 13 of the 16 Zacks sectors, including the Technology and Finance sectors. The Auto sector has the weakest growth of all 16 sectors, with +0.3% earnings growth on +1.4% higher revenues.
- Net margins are expected to increase 1.4 percentage points from the year-earlier period, with Finance, Technology, Industrials, Energy and Construction driving most of the margin gains.
- Energy sector earnings are expected to be up +71.9% from the same period last year on +13.9% higher revenues. Excluding the Energy sector, total S&P 500 earnings growth drops from +23.1% to +21.4%.
- For full-year 2018, total earnings for the S&P 500 index are expected to be up +19.1% on +5.6% higher revenues. For full-year 2019, earnings are expected to be up +9.3% on +4.5% higher revenues.
- The implied ‘EPS’ for the entire index, calculated using current 2018 P/E of 17.1X and index close, as of May 1st, is $152.60. Using the same methodology, the index ‘EPS’ works out to $166.84 for 2019 (P/E of 15.6X). The multiples for 2018 and 2019 have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.
The key takeaways from this earnings season are coming up, but let’s get the updated scorecard first.
We now have Q1 results from 343 S&P 500 members, or 68.6% of the index’s total membership. Total earnings for these 343 S&P 500 members are up +24% from the same period last year on +9.5% higher revenues, with 78.4% beating EPS estimates and 75.8% beating revenue estimates. The proportion of S&P 500 members beating both Q1 EPS and revenue estimates is 64.1%.
The charts below compare the results thus far with what we have seen from the same group of 343 index members in other recent periods.
What these comparison charts shows are:
- The earnings growth rate (+24%) for these 343 index members is significantly higher than what we have been seeing from the same group of companies in other recent periods.
- The Q1 revenue growth rate (+9.5%) represents an acceleration from all other periods in the chart.
- The proportion of positive EPS beasts (78.4%) is modestly above what we saw in 2017 Q4 (78.1%), the 4-quarter average (76.4%) and 12-quarter average (72.8%).
- Revenue beats for these 343 index members at 75.8% is the only metric that is tracking below what we had seen from the same group of companies in the preceding period, but it remains above other historical periods.
Apple (AAPL - Free Report) became the latest Tech giant to come out with earnings and revenue growth levels that are typically associated with much smaller companies. Apple’s March-quarter earnings are up +25.3% on +15.6% higher revenues, which follows Alphabet’s (GOOGL - Free Report) +23.5% and Facebook’s (FB - Free Report) +49% revenue growth. Tech sector results have been very strong, with a record 92.1% sector companies beating estimates and total earnings on track to be up +28.4% on +12.6% higher revenues.