The fourth quarter earnings season kicks into high gear this week with reports from big tech names starting to trickle in. Yahoo is set to report tonight, while eBay is due on Wednesday and Alphabet and Microsoft are expected on Thursday, just to name a few. But what about the Consumer sectors? S&P Capital IQ says Discretionary deserves another look, while Bernstein favors Financials and Energy over Consumer groups.

Revision trends favor Financials, Energy

In a research note dated Jan. 19, Bernstein analyst Ann Larson offered analysis of revision trends for the S&P 500 and declared Financials and Energy to be more attractive than the Consumer sector. She noted that consensus estimates for the sector’s earnings suggest 2.4% growth on the back of a 4.4% increase in revenues.

Utilities, Financials and Technology are expected to lead the way in growth, with seven of the 11 sectors in the index expected to post growth. Earnings finally rebounded in the third quarter on the heels of four quarterly declines.

Investors may be pricing in too much earnings growth

Larson notes that growth estimates for S& 500 earnings haven’t seen as aggressive cuts as usual, with revisions falling from 4.1% in September to 2.4% today. However, S&P Capital IQ analyst Lindsey Bell warned earlier this month that estimates could be too high. She does find the consensus “reasonable” amid strong third quarter growth and improving economic data. Also there haven’t been as many negative preannouncements as previous quarters, and the fourth quarter faces another easy comparison against the year-ago quarter’s decline of 4.1% in earnings per share.

Bell’s concern isn’t so much about consensus as it is about what investors may be pricing in, as she believes investors’ expectations may be higher than consensus. She also expressed concern about guidance, as she feels managements may be conservative. While this is pretty standard, she predicts that it will cause a pullback in the market.

What to do with Consumer Discretionary?

Where estimate revisions are concerned, Larson notes that the Financials and Energy sectors have so far seen favorable earnings revisions, while estimates for the Consumer groups have been cut. Energy is up against easy comparisons amid the deep plunges the sector has seen in earnings over the last several quarters. The Financials sector has also been showing strong growth, but revisions for the Real Estate, Consumer Staples and Consumer Discretionary have been the deepest, says Larson.

Bell, on the other hand, said in a note on Jan. 12 that it might be time to “give Consumer Discretionary a second look.” Growth estimates for the sector have been cut from 5% to a decline of three-tenths of a percent since October, she noted.

Don’t write off Consumer Discretionary yet

“The dramatic adjustment in expectations for a sector that has been a key driver of earnings and the economy in the past two years caught our eye,” she wrote.

The Consumer Discretionary sector’s has been underperforming the S&P 500 continuously on year-to-date basis (starting January 2016) since mid-May 2016. The sector’s performance has been one of the bottom four of the 11 sectors.

As the sector’s stock performance has tumbled, consumer confidence rallied throughout last year, hitting levels not observed since 2001. Consumer sentiment climbed to levels not observed since 2004, and the unemployment rate hit 4.7% in December, reaching the level observed before the recession. Wages are also on the rise, and as the stock market rises, consumer and business confidence go up with it. The housing market rises as well, and auto sales were up for the seventh consecutive year, hitting a record high, Bell noted. All these positive indicators don’t necessarily mean it will be smooth sailing for the sector, however.

“Rising interest rates could have a negative impact on the housing market and auto sales,” Bell wrote. “Additionally, it would be more beneficial to the economy to see a more broad based increase in wages, rather than just for low end earnings. These are concerns for consumer discretionary that we shouldn’t ignore and coupled with tough year-over-year earnings growth comparisons, a near-term slowdown in the sector’s earnings growth makes sense, but a decline in growth is a bit overdone in our opinion.”

Rather than looking at Consumer Discretionary as a whole, Bell takes a deep dive and breaks it into sub-sectors. She feels that media and retail are the biggest drag on the sector, as they are the source of all of the negative earnings growth revisions Larson noted in her analysis.