Of the 265 companies in the index that have reported earnings to date for Q2 2012, 71% have reported actual EPS above the mean EPS estimate. This percentage is consistent with the average over the past four quarters (72%). In terms of revenues, just 43% of companies have reported actual sales above estimated sales. This percentage is well below the average over the past four quarters (63%). If 43% is the final percentage, it would mark the lowest number since Q1 2009 (37%).
The blended earnings growth rate for the S&P 500 for Q2 2012 is 3.3%, slightly above last week’s growth rate of 3.1%. The improvement in the growth rate is mainly due to upside earnings surprises from companies in the Industrials (Caterpillar) and Telecom Services (AT&T) sectors, partially offset by downside earnings surprises from companies in the Information Technology (Apple) and Energy (ExxonMobil) sectors.
Bank of America is the largest contributor to earnings growth for the index at the company level, mainly due to an easy comparison to a large loss reported in the year-ago quarter. Excluding Bank of America, the blended earnings growth rate for the index falls to -1.5% from 3.3%.
Five of the ten sectors are reporting earnings growth for the quarter, led by the Financial (53.8%) and Industrials (11.3%) sectors. The Energy (-23.7%) and Materials (-14.5%) sectors have the lowest earnings growth rates, as oil and commodity prices dropped during the quarter. Although nine of the ten sectors are reporting revenue growth for the quarter, the blended sales growth rate is 1%. Slower economic growth in Europe and in emerging markets countries (China) and less favorable foreign-exchange rates had a negative impact on both top-line and bottom-line growth for many companies in the index.
Looking ahead, companies and analysts have reduced earnings estimates for the 2nd half of 2012 since the start of the third quarter. In terms of guidance for Q3 2012, 47 companies in the S&P 500 have issued negative EPS preannouncements to date while just 13 companies have issued positive EPS preannouncements. Analysts now expect a year-over-year decline in earnings for Q3 (-1.6%). Despite cuts to estimates, analysts still project double-digit earnings growth (11.1%) for Q4 2012.
Read more about the earnings trends of the S&P 500 in this week's edition of FactSet Earnings Insight.
Visit www.factset.com/earningsinsight to launch the latest report.
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