Markets

Zacks Earnings Trends Highlights: Positive Start to Q3 Earnings Season

For Immediate Release

Chicago, IL - October 19, 2017 - Zacks Director of Research Sheraz Mian says, "Total earnings for the 52 S&P 500 members that have reported already are up +13.3% from the same period last year on +6.9% higher revenues."

Positive Start to Q3 Earnings Season

Note: The following is an excerpt from this week's Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>

Here are the key points:

• We are off to a good start to the Q3 earnings season despite the less-than-stellar banking results, with an accelerating revenue growth trend as particularly notable at this stage.

• Total earnings for the 52 S&P 500 members that have reported already are up +13.3% from the same period last year on +6.9% higher revenues, with 76.9% beating EPS estimates and 73.1% beating revenue estimates.

• The growth pace and beats proportion was very strong in the Q2 earnings season relative to historical periods, but the aggregate picture emerging from the Q3 earnings season is keeping up with the preceding quarter's strong showing.

• There is plenty of momentum on the revenue side this earnings season, with the revenue growth pace accelerating and an above-average proportion of companies beating top-line estimates.

• Bank results have been underwhelming, with the growth pace modestly decelerating from the trend that we have been seeing in other recent quarters and fewer companies are coming out with positive revenue surprises.

• For the quarter as whole, total Q3 earnings for the S&P 500 index are expected to be up +3% from the same period last year on +4.9% 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 at +9.1%, the Q3 growth is on track to be the lowest this 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, Aerospace and Transportation sectors.

• Earnings growth for Q3 drops to +1.1% (from +3%) 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. The Tech and Industrial sectors are a shade below the +10% level.

• For full-year 2017, total earnings for the S&P 500 index are expected to be up +7.1% on +4.6% higher revenues, which would follow +0.7% earnings growth on +2.2% higher revenues in 2016. Index earnings are expected to be up +11.8% in 2018 and +9.2% in 2019.

• Earnings growth is expected to turn positive in Q3 for the small-cap S&P 600 index, with total earnings for the index expected to be up +8.3% from the same period last year on +5.2% higher revenues. This would follow persistent earnings declines for the small-cap index - S&P 600 earnings growth was negative in 3 of the last 4 quarters.

• Strong growth from the Finance, Technology and Energy sectors is driving the small-cap growth. The Finance sector's role is particularly notable in the small-cap index, with Q3 earnings growth dropping to +0.9% (from +8.3%) on an ex-Finance basis.

We now have Q3 results from 52 S&P 500 members that combined account for 16.7% of the index's total market capitalization. Total earnings for these 52 index members are up +13.3% from the same period last year on +6.9% higher revenues, with 76.9% beating EPS estimates and 73.1% beating revenue estimates.

Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview . He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.

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Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview . He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.

If you want an email notification each time Sheraz Mian publishes a new article, pleaseclick here>>>

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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