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Earnings growth is expected to be negative territory in the Q3 earnings season as well, which will be the 6th quarter in a row of earnings declines for the S&P 500 index. Total earnings for the index are expected to be down -3% from the same period last year on +1.2% higher revenues.

The Energy sector continues to be a big drag in Q3 as well, with total earnings for the sector expected to decline -68.2% from the same period last year on -14.3% lower revenues. Excluding the Energy sector, total earnings for the rest of the S&P 500 index would be up +0.3% from the same period last year.

Other sectors with big declines in Q3 include Transportation (earnings expected to decline -21.6%) and Autos (-18.5%). Overall, half of the 16 Zacks sectors are expected to produce lower earnings in Q3 relative to the year-earlier period.

The Transportation sector’s -21.6% earnings decline on +0.3% higher revenues is primarily due to the air carriers like American Airlines (AAL - Free Report) and United Continental (UAL - Free Report) whose profits have suffered as a result of higher labor expenses following recent contract awards. The Auto sector’s weak growth in the quarter is primarily concentrated in Ford (F - Free Report) , whose earnings are expected to be roughly half of the year-earlier level.

For the Technology sector, Q3 earnings are expected to be -1.8% below the year-earlier level on -1.1% lower revenues, with Apple (AAPL - Free Report) as the big drag on the sector’s growth picture. Apple’s Q3 earnings are expected to be down 20.9% from the same period last year on -9.6% lower revenues. Excluding the Apple drag, the Tech sector’s Q3 earnings would be up +3% on +0.5% higher revenues.

On the positive side, Business Services (earnings growth of +7%), Construction (+6.4%), Utilities (+4.6%) and Finance (+4%) are some of the sectors expected to produce modestly higher earnings relative to the same period last year.

Beyond Q3, earnings growth is expected to turn positive in the last quarter of the year, with total earnings for the S&P 500 index expected to be up +5.3% from the same period. A big contributor to the Q4 growth is easy comparisons for the Energy sector whose growth turns positive after many quarters of declines.  There is positive growth in Q4 beyond the Energy sector, with many sectors like Finance, Technology, Basic Materials and Construction contributing to the growth resumption.

It will be interesting to see how much these Q4 expectations come down as companies report Q3 results and provide guidance.

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