How Did S&P 500 Companies Fare During Q2 2012 Earnings Season and What’s in Store for Q3?
Of the 492 companies in the S&P 500 index that have reported earnings to date for Q2 2012, 70% 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 42% of companies reported actual sales above estimated sales. This percentage is well below the average over the past four quarters (63%), and is the lowest percentage recorded since Q1 2009 (37%).
In aggregate companies reported actual earnings that were 4.6% above the estimates. This percentage is consistent with the average over the past four quarters (4.8%). In terms of revenue, the aggregate difference between actual revenues and estimated revenues was 0.1%. This percentage is below the average over the past four quarters (1.6%).
The blended earnings growth rate for the S&P 500 for Q2 2012 is 6.5%, unchanged from last week. Bank of America was 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 would fall to 1.5% from 6.5%.
Eight of the ten sectors reported earnings growth for the quarter, led by the Financials (62.2%) and Industrials (11.7%) sectors. The Energy (-19.1%) and Materials (-15.4%) sectors had the lowest earnings growth rates, as oil and commodity prices dropped during the quarter. Although seven of the ten sectors are reporting revenue growth for the quarter, the blended sales growth rate is 0.7%.
Slower economic growth in Europe and 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 in the second quarter.
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, 80 companies in the S&P 500 have issued negative EPS preannouncements to date while just 21 companies have issued positive EPS preannouncements.
These numbers are more negative compared to recent quarters. Analysts now expect a year-over-year decline in earnings for Q3 (-2.8%). Despite cuts to estimates, analysts still project double-digit earnings growth (10.0%) for Q4 2012.
During the upcoming week, three companies in the S&P 500 are scheduled to report earnings for Q2 2012.