Here are the key points from the week’s earnings trends:
• We will start getting the earnings Q4 results in about two weeks’ time, though the reporting season will really get going only in the second week of the New Year.
• Total Q4 earnings are expected to be up +8.6% from the same period last year on +6.6% higher revenues. The revisions trend for Q4 estimates has been very favorable, with earnings estimates holding up a lot better relative to other comparable periods.
• The Q3 is effectively over, with results from 494 S&P 500 members already out. Total earnings for the 494 S&P 500 members that have reported already are up +6.5% from the same period last year on +5.8% higher revenues, with 72.5% beating EPS estimates and 67.2% beating revenue estimates.
• While Q3 earnings growth lagged the preceding two quarters’ double-digit growth pace, revenue growth showed steady acceleration. Q3 earnings growth starts looking comparable to the preceding two quarters once the Finance sector’s drag is excluded from the results.
• Excluding the Finance sector, Q3 earnings growth improves to +10.3% from +6.3%. The Energy sector has the opposite effect, with Q3 earnings growth declining to +4.3% on an ex-Energy basis.
• While Finance sector results have been below average, this earnings season turned out to be a good one for the Energy, Industrial Products, Technology, Construction, Business Services, and Medical sectors.
• For full-year 2017, total earnings for the S&P 500 index are expected to be up +7.6% on +5% higher revenues, which would follow +0.7% earnings growth on +2.2% higher revenues in 2016. Index earnings are expected to be up +11.6% in 2018 and +9.5% in 2019.
• Earnings growth turned positive in Q3 for the small-cap S&P 600 index, with total earnings for the index expected to be up +5.2% from the same period last year on +5.8% higher revenues. This follows persistent earnings declines for the small-cap index – S&P 600 earnings growth was negative in 3 of the last 4 quarters.
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