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JPMorgan Chase largest contributor to increase in dollar-level earnings for S&P 500's Financials sector

Jul 12, 2013

S&P 500 Financials Sector: Top Contributors to Dollar-Level Increase in Earnings for Q2The Financials sector will be a focus sector for the market during the upcoming week because the sector has the most companies (22) scheduled to release earnings and because the sector is reporting the highest earnings growth of all ten sectors at 18.7%. The sector is reporting a year-over-year increase in earnings of $7.5 billion ($47.8 billion for Q2 2013 compared to $40.2 billion in Q2 2012) for the quarter. The largest contributor (17%) at the company level to the $7.5 billion dollar year-over-year increase in earnings for the sector is JPMorgan Chase, due to the upside earning surprise reported today. The company reported actual EPS for Q2 2013 of $1.60, which was well above the mean EPS estimate of $1.44 and year-ago EPS of $1.21.

Of the 30 companies that have reported earnings to date for the quarter, 73% have reported earnings above estimates. This percentage is equal to the average of 73% recorded over the past four years. However, only 47% of companies have reported sales above estimates. This percentage is well below the average of 58% recorded over the past four years. If 47% is the final percentage, it will mark the fourth time in the last five quarters that the percentage of companies reporting revenue above estimates finished below 50%.

The blended earnings growth rate for the S&P 500 overall for Q2 2013 is 0.6% this week, slightly above last week’s growth rate of 0.5%. Upside earnings surprises reported by JPMorgan Chase (+11%) and Wells Fargo (+6%) more than offset small downward revisions to estimates for companies in the Energy sector during the week. On June 30, the Q2 earnings growth rate for the index was also 0.6%. Seven of the ten sectors have witnessed a decline in earnings growth rates since that date, led by the Materials and Information Technology sectors. Only the Financials sectors has seen an increase in expected earnings growth since the end of the quarter.

If the final earnings growth rate for the quarter is 0.6%, it will mark the third consecutive quarter of growth for the index. However, only four of the ten sectors are projected to report an earnings increase for the quarter, led by the Financials (18.7%) sector. On the other hand, the Materials (-8.4%) and Information Technology (-6.5%) sectors are predicted to see the lowest earnings growth. The estimated revenue growth rate for the index for Q2 is 0.9%, down from an estimate of 1.1% at the end of the quarter.

The upcoming week marks the start of “peak” weeks the Q2 2013 earnings season, as ten Dow 30 companies and 74 S&P 500 companies are scheduled to report earnings for the second quarter.

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.