S&P 500 Earnings: Which Sector’s Saw Less Downward Pressure?

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#us500 #snp500

First, let’s get to the earnings metrics missed this weekend:

  • Fwd 4-qtr est: $171.52 vs $171.47
  • PE ratio: 16.7x
  • PEG ratio: 3.63x
  • SP 500 earnings yld: 5.97% vs. final week’s 6.23%
  • Y/y progress of Fwd est: +4.7% vs final week’s +4.66%

(Source: earnings information from IBES by Refinitiv, the calculations are my very own)

There have been solely two weeks this quarter the place the “ahead 4-quarter estimate” elevated sequentially, the primary week was April 26, when the estimate jumped $0.26 after which this week, the place the ahead 4-quarter estimate improved $0.05 (sure, a whopping 5 cents) sequentially, however the ahead progress charge improved from 4.66% to 4.7% as nicely.

With all of the headlines round China, commerce wars and tariffs, Mexico, the Fed, don’t neglect about S&P 500 earnings.

The 2020 EPS estimate for the S&P 500 has been rock stable anticipating 12% earnings progress subsequent 12 months; that hasn’t modified in 19 weeks.

A fast peek into Q2 ’19 sector progress charges – which sectors have held up one of the best ?

As of final weekend, the S&P 500 is anticipating flat earnings progress for Q2 ’19, lapping the hardest comps from 2018’s “tax-cut-aided” progress final 12 months.

Here are the sectors with progress charges which have held up nicely in the course of the interval the place the unfavorable revisions are normally the heaviest:

  • Energy: -0.3% as of June seventh, versus an anticipated -8.9% progress charge as of April 1;
  • Financials: +6.1% as of June seventh, versus 7% as of April 1;
  • Hlth Care: +2.8% as of June seventh, vs +3% as of April 1;
  • Comm Serv: +16.4% as of June seventh vs +17.6% as of April 1;
  • Utilities: +2.4% as of June seventh vs +1.9% as of April 1;

Long-term readers in all probability keep in mind that the heaviest interval of unfavorable revisions to sector progress charges is normally the quarter of the experiences, that means that for Q2 ’19 earnings, the April, May, June interval normally sees the heaviest unfavorable revisions. The sectors above are seeing comparatively extra stability to their anticipated progress charges. For Utilities and Energy, the expansion charges have been raised.

Energy is surprising to me because the value of was down sharply in May ’19, together with the remainder of the fairness market.

The Technology sector has seen decrease progress charges from -5.8% as of April 1 to -8.2% as of June 7.

The Communications sector deserves a better look given its anticipated 16% progress charge, simply the best of the 11 S&P 500 sectors for Q2 ’19.

Thanks for studying.

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