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SPX Earnings Scorecard

07/29/2013

As of July 27, 260 S&P 500® Index (SPX) companies have reported earnings for the second quarter of 2013 (Table 1). Next week 134 more companies will report earnings led by 19 energy, 20 utilities, 16 health care, and 26 financial. The following week presents a majority of consumer discretionary companies.

On Tuesday, July 23, the SPX (Figure 1) recorded another new all-time high of 1698.78. The SPX currently trades at 16.21 times current 2013 earnings of $104.34. Quarterly earnings are tracking at $26.95, slightly lowering consensus estimates for 2013 earnings from $111 to $110.34. Gross margin is 31.94%, down from 32.08% at the end of 2012. Operating margin is 13.42%, up from 13.37% at the end of 2012. Profit margin is 8.60%, up from 8.26% at the end of 2012.

The majority of companies providing negative guidance originate from technology. Whether the expected weakness is from muted Asia demand or a slowdown in enterprise spending, the following technology companies have lowered third quarter EPS: Teradyne (TER), Adobe (ADBE), Citrix (CTXS), EBay (EBAY), Akamai (AKAM), and Qualcomm (QCOM).

The majority of companies providing positive guidance are within consumer discretionary. Starbucks (SBUX), Starwood Hotels (HOT), and Johnson Controls (JCI) all raised third quarter EPS.

This week I will be paying close attention to these earnings reports:

  • Monday – Hartford Financial (HIG), XL Group (XL)
  • Tuesday – Occidental (OXY), Pfizer (PFE), Merck (MRK), U.S. Steel (X)
  • Wednesday – MasterCard (MA), Marriott (MAR), Whole Foods (WFM)
  • Thursday – ConocoPhillips (COP), Exxon (XOM), AIG, Vulcan Materials (VMC)
  • Friday – Eaton (ETN), Chevron (CVX)

Table 1: Q2 2013 Earnings Scorecard to Date, as of Sunday, July 28

Sector

Reported

Yet to Report

EPS Growth

EPS Surprise

Sales Growth

Sales Surprise

Overall SPX

260

240

5.68%

3.29%

3.60%

0.64%

Financials

48

33

35.66%

8.90%

8.19%

2.67%

Technology

42

28

-5.63%

-0.36%

2.33%

-0.44%

Consumer Discretionary

37

46

12.15%

5.30%

8.66%

0.76%

Industrials

40

22

-2.05%

2.91%

0.12%

0.40%

Health Care

29

25

3.03%

7.00%

5.08%

0.31%

Energy

18

25

0.82%

1.88%

3.00%

5.74%

Consumer Staples

19

21

4.54%

-0.17%

1.11%

-1.98%

Materials

21

9

-13.09%

-3.35%

-1.79%

-0.62%

Telecom

3

3

-1.10%

-0.60%

3.10%

0.33%

Utilities

3

28

-13.29%

-5.85%

3.92%

2.08%

Source: Bloomberg

Figure 1: S&P 500 Index (SPX) Year to Date7-29 Terranova 2.1
Source: Bloomberg

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.