Q3 Earnings Season Gets Going

The Q3 earnings season has gotten underway already, with results from 26 S&P 500 members out at this stage. Total earnings for these 26 index members are up +22.5% from the same period last year on +9.4% higher revenues, with 84.6% beating EPS estimates and 84.6% beating revenue estimates.

This growth pace and beats proportion is about in-line with what we had seen from the same group of 26 index members in the preceding quarter, but it is an improvement over the 4- and 12-quarter averages, respectively.

For the quarter as whole, total Q3 earnings for the S&P 500 index are expected to be up +1.2% from the same period last year on +5.1% higher revenues. With double-digit growth in each of the first two quarters of the year and earnings growth in the last quarter of the year currently expected to be in high single digits, the Q3 growth is on track to be the lowest this year.

Tough comparisons for the Finance sector was all along keeping the overall Q3 growth pace down, with the sector’s year-over-year comparison notably deteriorating over the last two months as a result of the insurance industry’s exposure to this year’s active hurricane season.

Q3 earnings for the insurance industry, which alone brings in roughly a quarter of the Finance sector’s total earnings, are expected to be down -45.1% from the same period last year on -0.7% lower revenues.Excluding the insurance drag, Finance sector earnings would be up +3.8% from the same period last year.  

Including the Finance sector, Q3 earnings growth is expected to be in negative territory for 8 of the 16 Zacks sectors, with double-digit declines for the Autos, Basic Materials, Aerospace and Transportation sectors.

Earnings growth for Q3 drops to -0.7% (from +1.2%) when the strong Energy sector contribution is excluded from the aggregate picture. The Conglomerates sector is the only other sector, in addition to Energy, with double-digit earnings growth in Q3.

Growth is expected to be strong for the Technology sector, with Tech earnings expected to be up +9.7% from the same period last year on +6.7% higher revenues.