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Earnings and Revenue Declines Projected for CY 2015 for S&P 500 Due To Energy Sector

By John Butters, Senior Earnings Analyst
Nov 13, 2015

The blended (combines actual results for companies that have reported and estimated results for companies yet to report) earnings decline for Q3 is -1.8%, while the blended revenue decline for Q3 is -4.0%. At this point in time, more than 90% of the companies in the S&P 500 have reported actual results for Q3. Thus, it now appears highly likely the index will report year-over-year declines in both earnings and revenues for the third quarter. As a result, the third quarter will mark the second consecutive of quarter of earnings declines and the third consecutive quarter of revenue declines for the S&P 500.

Do analysts believe the string of consecutive quarters of year-over-year declines in earnings and revenues will continue in Q4? Do analysts believe the S&P 500 will report year-over-year declines in earnings and revenues for all of 2015?

The answer to the first questions is yes. For Q4 2015, the estimated earnings decline is -3.6%, while the estimated revenue decline is -3.1%. If the index reports a year-over-year decline in earnings for the fourth quarter, it will mark the first time the index has seen three consecutive quarters of year-over-year declines in earnings since Q1 2009 through Q3 2009. If the index reports a year-over-year decline in revenues for the fourth quarter, it will mark the first time the index has seen four consecutive quarters of year-over-year declines in revenues since Q4 2008 through Q3 2009.

The answer to the second questions is also yes. For CY 2015, the estimated earnings decline is -0.3%, while the estimated revenue decline is -3.4%. If the index reports a year-over-year decline in earnings for CY 2015, it will mark the first time the index has reported a year-over-year decline in earnings on an annual basis since CY 2009 (-8.0%). If the index reports a year-over-year decline in revenues for CY 2015, it will mark the first time the index has reported a year-over-year decline in revenues on an annual basis since CY 2009 (-7.7%).

It is important to note that the Energy sector is projected to be the largest contributor to the estimated earnings and revenue declines for the fourth quarter and for all of 2015. For Q4 2015, the estimated earnings decline for the Energy sector is -64.3%, while the estimated revenue decline is -34.2%. For CY 2015, the estimated earnings decline is -58.5%, while the estimated revenue decline is -34.4%.

If the Energy sector is excluded from the growth calculations for Q4 2015, the estimated earnings growth rate for the quarter would be 1.6%, and the estimated revenue growth rate would be 1.2%. If the Energy sector is excluded from the growth calculations for CY 2015, the estimated earnings growth rate for the year would be 6.9%, and the estimated revenue growth rate would be 1.9%.

Looking ahead to next year, analysts expect earnings and revenue growth for all four quarters and the full year, as the year-over-year comparisons in the Energy sector become more favorable in CY 2016.

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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