June 14, 2019

This Week in Earnings 19Q1 | Jun. 14, 2019

by David Aurelio and Tajinder Dhillon.

Last Update: Jun. 14, 2019

To download the full This Week in Earnings report click here.

Please note: if you use our earnings data, please source I/B/E/S data from Refinitiv

Aggregate Estimates and Revisions

  • First quarter earnings are expected to increase 1.6% from 18Q1. Excluding the energy sector, the earnings growth estimate is 3.0%.
  • Of the 496 companies in the S&P 500 that have reported earnings to date for 19Q1, 75.6% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 76%.
  • 19Q1 revenue is expected to increase 5.6% from 18Q1. Excluding the energy sector, the growth estimate is 6.2%.
  • 57.0% of companies have reported 19Q1 revenue above analyst expectations. This compares to a long-term average of 60% and prior four quarter average of 67%.
  • For 19Q2, there have been 77 negative EPS preannouncements issued by S&P 500 corporations compared to 22 positive, which results in an N/P ratio of 3.5 for the S&P 500.
  • The forward four-quarter (19Q2 –20Q1) P/E ratio for the S&P 500 is 16.9.
  • During the week of June 17, six S&P 500 companies are expected to report earnings.

19Q1 Earnings Growth Highlights

The estimated earnings growth rate for the S&P 500 for 19Q1 is 1.6%. If the energy sector is excluded, the growth rate improves to 3.0%. The S&P 500 expects to see share-weighted earnings of $320.0B in 19Q1, compared to share-weighted earnings of $315.0B (based on the year-ago earnings of the current 505 constituents) in 18Q1.

Six of the 11 sectors in the index expect to see an improvement in earnings relative to 18Q1. The health care and consumer discretionary sectors have the highest earnings growth rates for the quarter, while the energy sector has the weakest anticipated growth compared to 18Q1.

The health care sector has the highest earnings growth rate (10.3%) of any sector. It is expected to earn $53.8B in 19Q1, compared to earnings of $48.8B in 18Q1. Nine of the ten sub-industries in the sector are anticipated to see higher earnings than a year ago. The managed health care (21.7%) and health care facilities (20.7%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 8.7%.

The consumer discretionary sector has the second highest earnings growth rate (8.1%) of any sector. It is expected to earn $24.3B in 19Q1, compared to earnings of $22.5B in 18Q1. Fifteen of the 24 sub-industries in the sector are anticipated to see higher earnings than a year ago. The leisure products (110%) and internet & direct marketing retail (74.1%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 0.6%.

The energy sector has the lowest earnings growth rate (-26.1%) of any sector. It is expected to earn $11.3B in 19Q1, compared to earnings of $15.3B in 18Q1. Three of the six sub-industries in the sector are anticipated to see lower earnings than a year ago. The oil & gas refining & marketing (-67.4%) and integrated oil & gas (-37.2%) sub-industries have the lowest earnings growth in the sector. If these sub-industries are removed, the growth rate improves to 0.0%.

19Q2 Earnings Growth Highlights

The estimated earnings growth rate for the S&P 500 for 19Q2 is 0.3%. If the energy sector is excluded, the growth rate improves to 0.3%. The S&P 500 expects to see share-weighted earnings of $333.5B in 19Q2, compared to share-weighted earnings of $332.6B (based on the year-ago earnings of the current 505 constituents) in 18Q2.

Five of the 11 sectors in the index expect to see an improvement in earnings relative to 18Q2. The communication services and financials sectors have the highest earnings growth rates for the quarter, while the materials sector has the weakest anticipated growth compared to 18Q2.

The communication services sector has the highest earnings growth rate (16.4%) of any sector. It is expected to earn $32.5B in 19Q2, compared to earnings of $27.9B in 18Q2. Five of the nine sub-industries in the sector are anticipated to see higher earnings than a year ago. The interactive media & services (62.5%) and broadcasting (31.9%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to -0.4%.

The financials sector has the second highest earnings growth rate (6.0%) of any sector. It is expected to earn $63.9B in 19Q2, compared to earnings of $60.3B in 18Q2. Eight of the 12 sub-industries in the sector are anticipated to see higher earnings than a year ago. The reinsurance (528.1%) and diversified banks (13.4%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 1.1%.

The materials sector has the lowest earnings growth rate (-28.2%) of any sector. It is expected to earn $8.3B in 19Q2, compared to earnings of $11.6B in 18Q2. Six of the 11 sub-industries in the sector are anticipated to see lower earnings than a year ago. The copper (-81.7%) and specialty chemicals (-46.0%) sub-industries have the lowest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to -4.9%.

19Q1 Revenue Growth Highlights

The estimated revenue growth rate for the S&P 500 for 19Q1 is 5.6%. If the energy sector is excluded, the growth rate improves to 6.2%. The S&P 500 expects to see revenue of $2,755.8B in 19Q1, compared to revenue of $2,608.7B (based on the year-ago revenue of the current 505 constituents) in 18Q1.
Nine of the 11 sectors anticipate revenue growth for the quarter. The health care sector has the highest revenue growth rate for the quarter, while the information technology sector has the weakest anticipated growth.

The health care sector has the highest revenue growth rate (14%) of any sector. It is expected to earn $510.2B in 19Q1, compared to revenue of $447.6B in 18Q1. All ten sub-industries in the sector are anticipated to see higher revenue than a year ago. The health care services (59.1%) and managed health care (14.9%) sub-industries have the highest revenue growth in the sector. If these sub-industries are removed, the growth rate declines to 3.1%.

The information technology sector has the lowest revenue growth rate (-0.8%) of any sector. It is expected to earn $284.8B in 19Q1, compared to revenue of $287.1B in 18Q1. 5 of the 12 sub-industries in the sector are anticipated to see lower revenue than a year ago. The semiconductor equipment (-16.6%) and electronic manufacturing services (-9.1%) sub-industries have the lowest revenue growth in the sector. If these sub-industries are removed, the growth rate improves to -0.2%.

Exhibit 1: S&P 500: Estimate Revisions by Sector

Exhibit 2: S&P 500: Estimate Revisions History

Exhibit 3: All U.S. Companies: Estimate Revisions by Sector

Exhibit 4: All U.S. Companies: Estimate Revisions History

See which North American companies StarMine predicts will beat and miss 19Q1 earnings:

StarMine Models Pick North American Companies for 19Q1 Earnings Beats

StarMine Models Pick North American Companies for 19Q1 Earnings Misses

Interested in learning how you can use the StarMine SmartEstimate® and Predicted Surprise® to avoid earnings misses and find earnings beats? Learn more here.

Each week the StarMine Earnings Surprise Forecast is published as part of the This Week in Earnings report. The forecast shows the S&P 500 companies with significant positive and negative Predicted Surprises expected to report over the next two weeks. Don’t be surprised when your holdings show up in This Week in Earnings, learn how to use Eikon from Refinitiv’s Screener app to see these companies ahead of publication here.

Additional index earnings reports on Lipper Alpha Insight:

S&P 500 Earnings Dashboard

S&P 400 MidCap Earnings Dashboard

S&P 600 SmallCap Earnings Dashboard

TSX Composite Earnings Dashboard

STOXX 600 Earnings Outlook

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