November 8, 2019

This Week in Earnings 19Q3 | Nov. 8

by David Aurelio.

Last Update: Nov. 8, 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

  • Third quarter earnings are expected to decrease 0.5% from 18Q3. Excluding the energy sector, the earnings growth estimate is 2.1%.
  • Of the 446 companies in the S&P 500 that have reported earnings to date for 19Q3, 74.2% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 74%.
  • 19Q3 revenue is expected to increase 3.9% from 18Q3. Excluding the energy sector, the growth estimate is 5.3%.
  • 58.0% of companies have reported 19Q3 revenue above analyst expectations. This compares to a long-term average of 60% and an average over the past four quarters of 59%.
  • For 19Q4, there have been 44 negative EPS preannouncements issued by S&P 500 corporations compared to 17 positive, which results in an N/P ratio of 2.6 for the S&P 500 Index.
  • The forward four-quarter (19Q4 –20Q3) P/E ratio for the S&P 500 is 17.8.
  • During the week of Nov. 11, 16 S&P 500 companies are expected to report quarterly earnings.

19Q3 Earnings Growth Highlights

The estimated earnings growth rate for the S&P 500 for 19Q3 is -0.5%. If the energy sector is excluded, the growth rate improves to 2.1%. The S&P 500 expects to see share-weighted earnings of $346.0B in 19Q3, compared to share-weighted earnings of $347.8B (based on the year-ago earnings of the current 505 constituents) in 18Q3.

Seven of the 11 sectors in the index expect to see an improvement in earnings relative to 18Q3. The health care and utilities sectors have the highest earnings growth rates for the quarter, while the energy sector has the weakest anticipated growth compared to 18Q3.

The health care sector has the highest earnings growth rate (9.4%) of any sector. It is expected to earn $56.9B in 19Q3, compared to earnings of $52B in 18Q3. Eight of the ten sub-industries in the sector are anticipated to see higher earnings than a year ago. The health care supplies (20.5%) and managed health care (17.0%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 8.5%.

The utilities sector has the second highest earnings growth rate (6.7%) of any sector. It is expected to earn $14.0B in 19Q3, compared to earnings of $13.1B in 18Q3. All five sub-industries in the sector are anticipated to see higher earnings than a year ago. The independent power producers & energy traders (67.1%) and gas utilities (19.5%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 4.3%.

The energy sector has the lowest earnings growth rate (-37.8%) of any sector. It is expected to earn $13.8B in 19Q3, compared to earnings of $22.2B in 18Q3. Four of the six sub-industries in the sector are anticipated to see lower earnings than a year ago. The integrated oil & gas (-50.1%) and oil & gas exploration & production (-47.2%) sub-industries have the lowest earnings growth in the sector. If these sub-industries are removed, the growth rate improves to -5.7%.

19Q4 Earnings Growth Highlights

The estimated earnings growth rate for the S&P 500 for 19Q4 is 0.6%. If the energy sector is excluded, the growth rate improves to 2.8%. The S&P 500 expects to see share-weighted earnings of $339.1B in 19Q4, compared to share-weighted earnings of $337.2B (based on the year-ago earnings of the current 505 constituents) in 18Q4.

Seven of the 11 sectors in the index expect to see an improvement in earnings relative to 18Q4. The utilities and financials sectors have the highest earnings growth rates for the quarter, while the energy sector has the weakest anticipated growth compared to 18Q4.

The utilities sector has the highest earnings growth rate (15.2%) of any sector. It is expected to earn $8.4B in 19Q4, compared to earnings of $7.3B in 18Q4. All five sub-industries in the sector are anticipated to see higher earnings than a year ago. The independent power producers & energy traders (78.4%) and multi-utilities (19.9%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 9.8%.

The financials sector has the second highest earnings growth rate (13.3%) of any sector. It is expected to earn $61.1B in 19Q4, compared to earnings of $54B in 18Q4. All 12 sub-industries in the sector are anticipated to see higher earnings than a year ago. The multi-line insurance (778.9%) and reinsurance (204.9%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 9.2%.

The energy sector has the lowest earnings growth rate (-33.5%) of any sector. It is expected to earn $13.9B in 19Q4, compared to earnings of $20.9B in 18Q4. Four of the six sub-industries in the sector are anticipated to see lower earnings than a year ago. The oil & gas drilling (-52.2%) and oil & gas refining & marketing (-45.7%) sub-industries have the lowest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to -29.8%.

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

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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