The Q1 earnings reporting cycle has kicked off and will be in full swing over the next few weeks. Investors will now probably veer away their attention from Trump to earnings. So far this year, the broader market story has been all about the continuation of the Trump rally, which started fading from March. But as Q2 unfolds, another round of earnings reporting cycle will take center stage and decide the fate of the market.
Why to Follow Revenue Growth This Reporting Cycle?
While earnings alone draw the attention of investors mostly, we would like to emphasize that sales also deserve equal attention.This is truer for this reporting cycle.Let’s tell you why.
Earnings projections started falling ahead of the Q1 earnings season from 10.6% expected at the end of 2016 to 6.6% expected currently. Agreed, the days of earnings recession are over but concerns persist.
For Q1,total earnings are expected to grow 6.6% from the same period last year on 6.5% higher revenues as per Earnings Trend issued on March 29, 2017. Earnings growth will likely slacken from Q4’s 7.4% rate while revenue growth will pace up from Q4’s 4.7%.
Seven out of the Zacks classified 16 sectors of the S&P 500 will likely witness a decline in earnings while just two are expected to witness a revenue decline.
Further, investors should note that sales are harder to be influenced in an income statement than earnings. A company can land up on decent earnings numbers by adopting cost-cutting or some other measures which do not speak for its core strength. But it is harder for a company to mold its revenue figure.
Below, we highlight four sectors and their related ETFs that could be used to book some profits on revenue growth potential. Each sector poses positive revenue growth estimates for Q1 and offers intriguing fundamentals to protect investors’ portfolios if a Trump slump grips the market.
Technology – Ark Web X.0 ETF (ARKW – Free Report)
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