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Earnings Season Closes Out

08/17/2012

As of Friday, August 17, earnings have been reported for 477 out of 500 S&P 500® Index (SPX) companies. Clearly, the world is challenged by an absence of growth. The corporate world is also experiencing its growth moderate as well.
 
The figures highlighted below present evidence in support of my Q3 overweight focus for the technology sector, where reliable growth is still evident.
 
Additionally energy, which I downgraded in February, has not been upgraded since. The sharp earnings contraction for that sector keeps me on hold despite the sector recently performing well. For those seeking energy allocations, as I suggested in my Q3 playbook ‘The Trend is Your Friend,” the areas I would focus on would be refiners and MLPs.
 
I also view final earnings results as continued evidence that a large-cap core equity strategy should be favored by investors.
 
Q2 SPX EARNINGS OVERALL
Top Line Sales Growth             +0.77%
Bottom Line EPS Growth         +0.28%
 
ENERGY
Top Line Sales Growth             -13.76%
Bottom Line EPS Growth         -20.65%
 
MATERIALS
Top Line Sales Growth             -0.50%
Bottom Line EPS Growth         -16.82%
 
INDUSTRIALS
Top Line Sales Growth             +4.93%
Bottom Line EPS Growth         +10.90%
 
CONSUMER DISCRETIONARY
Top Line Sales Growth             +1.86%
Bottom Line EPS Growth         +0.04%
 
CONSUMER STAPLES
Top Line Sales Growth             +3.05%
Bottom Line EPS Growth         +1.21%
 
HEALTH CARE
Top Line Sales Growth             +7.94%
Bottom Line EPS Growth         +2.60%
 
FINANCIALS
Top Line Sales Growth             +3.27%
Bottom Line EPS Growth         +5.62%
 
TECHNOLOGY
Top Line Sales Growth             +7.51%
Bottom Line EPS Growth         +9.41%
 
TELECOM
Top Line Sales Growth             +3.21%
Bottom Line EPS Growth         +3.07%
 
UTILITIES
Top Line Sales Growth             -3.68%
Bottom Line EPS Growth         +0.37%

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.