S&P 500 earnings are rising, but do take a second look
S&P 500 index company earnings for the second quarter came out better than expected overall. Still, it's debatable whether overall results were actually good, given that year-over-year growth was subject to the strength of a single sector — energy.
With 479, or 95.2%, of $S&P 500 Index(.SPX.US$ companies reporting results for the latest quarter as of last Friday morning, aggregate blended year-over-year EPS growth, which includes reported results and estimates of results yet to be reported, was 6.3%, according to FactSet, down from nearly 7% growth earlier in the month but up from 5.4% at the end of the first quarter.
The lagging retailers
The overall EPS growth also slightly slowed as retailers reported an overall profit decline last week, even as revenue rose. Still, blended EPS growth was negative 8.2% for the consumer discretionary sector and negative 0.1% for the consumer staples sector, according to Bloomberg.
Despite the weakness, excluding energy, it's fair to say that overall results were better than expected, or at least much better than feared. Of the companies that reported, 77.8% beat consensus analyst expectations, according to Refinitiv, compared with a beat rate of 66% in a typical quarter since 1994.
Future estimates
For the third quarter, aggregate S&P 500 EPS is expected to rise 4.3%, and well below growth expectations as of March 31, while the growth estimate fell to 9.65% this month for 2022, according to Bloomberg.
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