The Q2 earnings season has kicked off on an impressive note, with total earnings for the 87 S&P 500 members that have released results so far, surging 20.9% year over year on 10.3% higher revenues, per the latest Earnings Trends report. Notably, overall earnings for all the S&P 500 companies are expected to be up 21% on 8.3% growth in revenues this season. Notably in the first quarter, total earnings growth was pegged at 24.6% on 8.7% higher revenues — its highest growth in almost seven years.
Industrial Sector on Growth Path
The Industrial Products
sector is one of the sectors which are expected to record double-digit earnings growth this quarter. According to our latest numbers, the sector’s earnings are on track to be up 27% in the quarter compared with last year.
Industrial production is one of the leading economic indicators for industrial stocks. U.S. industrial production rose 0.6% in June after declining 0.5% in May. Overall, for the second quarter, industrial production improved at an annual rate of 6% — marking its third consecutive quarterly increase. Manufacturing output inched up 0.8% in June and increased at an annual rate of 1.9% for the second quarter. Mining output increased 1.2% in June marking its fifth consecutive monthly increase and hit an all-time high aided by gains in the oil and gas sector. The index jumped more than 19% at an annual rate in the second quarter.
Further, improved trend in new orders, strong housing and commercial construction markets, growth in job additions and an improving U.S economy bode well for the sector.
It will be interesting to see how some of the industrial stocks fare when the companies release second-quarter 2018 numbers on Jul 25.
(IR - Free Report
) is scheduled to report second-quarter 2018 results before the opening bell. Stellar top-line growth, pricing actions and improved productivity are projected to be conducive to Ingersoll’s near-term performance. However, inflationary headwinds remains a woe. Material cost inflation across tier 1 and tier 2 markets might weigh over the company’s margins. Moreover, escalating freight charges and investments over high ROI projects are likely to hurt the company’s profitability.
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