FxWirePro: S&P 500 earnings update

So far 95 percent of the companies in S&P 500 have reported their Q3 earnings. Let’s take a look at the key takeaways,

Earnings:

• So far, 74 percent of the companies that reported actual results, reported better than expected earnings, the same figure as last week. Only 26 percent of the companies reported worse than estimated earnings. Average earnings growth rate so far is 6.2 percent, which is higher than 6.1 percent reported last week.
• It was forecasted after the quarter, that growth rate will be 3 percent. Eight sectors are reporting higher earnings growth, led by the energy sector, information technology, and materials sector.
• Earnings surprise percentage is at +4.5 percent, which is above w 5-year average. However, it is down 0.1 percent from last week, and 0.3 percent from the week before. It is also below 1-year average, which is +5.1 percent.
• At the sector level, the Information Technology (90 percent), Health Care (80 percent) sectors have the highest percentages of companies reporting earnings above estimates, while the Telecom (33 percent) and Utilities (50 percent) sector has the lowest percentage of companies reporting earnings above estimates.
• Insurance companies reported biggest earnings decline due to Hurricanes and Earthquake in Mexico.

Sales:

• 66 percent of the companies reported higher sales than estimated, same figure last week, and slightly lower 67 percent a week before. Sales growth rate is at 5.9 percent, which is 0.1 percent higher compared to last week.
• At the sector level, the Information Technology (84 percent) sector has the highest percentages of companies reporting revenues above estimates, while the Telecom services (25 percent) and Utilities (21 percent) sector have the lowest percentages of companies reporting revenues above estimates.

This week 15 companies are expected to report Q3 results. The current forward 12-month P/E ratio for the S&P 500 is at 18, higher than its 5-year average of 15.7 and 10-year average of 14.1

Better than expected earnings in 2017 have pushed all three, S&P 500, Dow Jones Industrial Average, and NASDAQ to all-time highs. S&P 500 is currently trading at 2575, while DOW is at 23358, and NASDAQ at 6783.

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