FxWirePro: S&P 500 earnings update

100 percent of the companies in S&P 500 have reported their Q4 earnings. Let’s take a look at the key takeaways,

Earnings:

• So far, 73 percent of the companies that reported actual results, reported better than expected earnings. Only 27 percent of the companies reported worse than estimated earnings. Average earnings growth rate so far is 14.8 percent, which is same as 14.8 percent reported last week. This is the highest pace of growth since Q3 2011. After the quarter, S&P500 forecasted 11 percent growth. So far, ten sectors have beaten that estimate.
• All eleven sectors are reporting better than expected earnings growth, with energy sector leading the way.
• Earnings surprise percentage is at +4.4 percent, which is above the 5-year average of +4.3 percent, but lower than the 1-year average of +4.6 percent.
• At the sector level, the Materials (88 percent), Healthcare (84 percent), and Information Technology (82 percent) sectors have the highest percentages of companies reporting earnings above estimates, while the Real Estate (48 percent), and Telecom (33 percent) sectors have the lowest percentage of companies reporting earnings above estimates.
• The new Tax reform is taking a toll on earnings of the financial sector companies, but lifting earnings of others.

Sales:

• 77 percent of the companies reported higher sales than estimated, so far, which is the highest reading since at least 2008. Sales growth rate is at 8.2 percent, which is higher than 6.7 percent estimate.
• At the sector level, the Health Care (87 percent), and IT (90 percent) sectors have the highest percentages of companies reporting revenues above estimates, while the Utilities (43 percent) sector has the lowest percentages of companies reporting revenues above estimates.

Q1/Q2/Q3 forecast:

• Earnings growth rate is estimated to be 17 percent in the first quarter of 2018, which would be the highest growth rate since Q1 2011 when earnings grew by 19.5 percent. Earnings growth rate was estimated to be 11.4 percent at the end of 2018, which has been revised higher now with energy sector leading the revision.
• So far in S&P500, 51 companies have issued negative guidance of Q1 2018, while 52 companies have issued positive guidance.
• Revenue growth rate is estimated to be 11.4 percent in Q1 2018.
• For Q2 2018, analysts are projecting earnings growth of 19 percent and revenue growth of 7.5% percent.
• For Q3 2018, analysts are projecting earnings growth of 20.8 percent and revenue growth of 6.2 percent.

The current forward 12-month P/E ratio for the S&P 500 is at 17.1, higher than its 5-year average of 16.1 and 10-year average of 14.3

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 2747, while DOW is at 24946, and NASDAQ at 7482.

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest