Earnings Scorecard: Season Gets Set to Close
The S&P 500® Index (SPX) quarterly earnings season is readying to close. As of Tuesday, November 13, 2012, only 44 SPX corporations remain to report. The materials, utilities, telecom, and financials sectors have fully reported. All but one energy company has reported; and Helmerich & Payne (HP) reports on Thursday, November 15, to complete the energy sector. Sixteen consumer discretionary companies and ten technology companies have yet to report.
To date, top line revenue growth is +0.12%, slightly ahead of consensus estimates for a contraction of -0.6%. Bottom line EPS growth is +1.32%, much better than the estimate for a contraction of -1.7%.
Earnings have very quietly improved from the initial discouraging reports during the first two weeks in October. Tech heavyweights Google (GOOG), IBM, Apple (AAPL), and Intel (INTC) all disappointed early in the reporting season. However, based on the evidence, I am confident that it would be a mistake to believe the overall reporting season was anything other than another resilient quarter of performance that beat consensus estimates. Earnings results should not be categorized as a culprit for the SPX sell-off post Labor Day (Figure 1.1). Corporations are still positioned best, certainly when compared to consumer and governmental balance sheets.
Consistent with our mid-summer “trend is Your friend” theme, sectors that have underperformed the SPX year to date, including energy, utilities, and materials, posted disappointing earnings results, while sectors of strength such as financials, consumer discretionary, health care, and technology all posted strong earnings results.
SPX Q3 Revenue Growth – Consensus Expectations vs. Actual for 456 out of 500 companies reported (Source: Bloomberg)
1. Overall: -0.6% vs. Actual +0.12%
2. Consumer Discretionary: +3.7% vs. Actual +3.65%
3. Consumer Staples: +3.2% vs. Actual +2.34%
4. Energy: -17.1% vs. Actual -14.67%
5. Financials: +0.7% vs. Actual +6.77%
6. Health Care: +1.2% vs. Actual +5.40%
7. Industrials: +2.4% vs. Actual +1.45%
8. Technology: +4.2% vs. Actual +6.22%
9. Materials: -4.4% vs. Actual -6.42%
10. Utilities: +10.6% vs. Actual +0.19%
SPX Q3 EPS Growth – Consensus Expectations vs. Actual for 456 out of 500 companies reported (Source: Bloomberg)
1. Overall: -1.7% vs. Actual +1.32%
2. Consumer Discretionary: +1.0% vs. Actual +5.25%
3. Consumer Staples: -1.0% vs. Actual -0.56%
4. Energy: -21.9% vs. Actual -20.62%
5. Financials: +20.0% vs. Actual +25.72%
6. Health Care: -3.9% vs. Actual +0.19%
7. Industrials: -0.1% vs. Actual +4.14%
8. Technology: +2.8% vs. Actual +3.18%
9. Materials: -22.6% vs. Actual -26.81%
10. Utilities: -4.2% vs. Actual -0.38%
Figure 1.1 S&P 500 Index (SPX) Year To Date