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Excluding Energy, Would the S&P 500 Report Growth in Earnings and Sales for Q2?

By John Butters, Senior Earnings Analyst
Jul 24, 2015

The Energy sector will be a focus for the market during the upcoming week, as both Exxon Mobil and Chevron are scheduled to report results on July 31. The Energy sector is reporting the largest year-over-year decline in earnings (-54.4%) and revenues (-38.2%) of all 10 sectors. This sector is also the largest contributor to the year-over-year decline in both earnings (-2.2%) and revenues (-4.0%) for the S&P 500 as a whole. If the Energy sector is excluded from the index, would the S&P 500 be reporting year-over-year growth in earnings and revenues for Q2?

The answer is yes. If the Energy sector is excluded, the blended (combines actual results and estimated results) earnings growth would improve to 4.1% from -2.2%, while the blended revenue growth rate for the S&P 500 would improve to 1.8% from -4.0%.

Given the negative impact of the stronger U.S. dollar (relative to last year) and slower global economic growth on earnings and revenue for U.S. companies, are companies in the S&P 500 (ex-Energy) with more global exposure reporting weaker sales and earnings growth relative to companies (ex- Energy) in the index with less global exposure?

The answer is also yes. The blended earnings growth rate for the S&P 500 (ex-Energy) for Q2 2015 is 4.1%. For companies (ex-Energy) that generate more than 50% of sales inside the U.S., the blended earnings growth rate is 8.3%. For companies (ex-Energy) that generate less than 50% of sales inside the U.S., the blended earnings decline is -0.2%.

The blended sales growth rate for the S&P 500 (ex-Energy) for Q2 2015 is 1.8%. For companies (ex-Energy) that generate more than 50% of sales inside the U.S., the blended sales growth rate is 3.5%. For companies (ex-Energy) that generate less than 50% of sales inside the U.S., the blended sales decline is -2.1%.

Read more about earnings trends in this edition of FactSet Earnings Insight. Visit www.factset.com/earningsinsight to launch the latest report.


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