S&P 500 Set To Witness 6.3 Percent Earnings Growth In Q4 2013

The Q4 2013 estimated earnings growth rate for the S&P 500 (INDEXSP:.INX) is pegged at 6.3% by FactSet.

The financial information systems provider however believes the estimated earnings growth is less than the 9.6% projected on September 30.

Financials to exhibit highest earnings growth

John Butters, Senior Earnings Analyst at FactSet believes the financial sector is projected to have the highest earnings growth rate for Q4 2013, while the energy sector is projected to have the lowest earnings growth rate for the quarter.

As can be deduced from the following graph, the financials sector is set to grow at 24.2% followed by industrial sectors at 14.1%.

Q4 2013 earnings growth S&P 500

Interestingly, on September 30, the earnings growth rate for Q4 2013 was 9.6%.

As can be seen from the above graph, all ten sectors have recorded a decrease in earnings growth rates over this time frame, led by the energy sector.

Information technology to post highest revenue growth

Turning focus towards revenue, FactSet analyst points out that information technology is projected to have the highest revenue growth followed by healthcare. This is evident from the following graph:

Q4 2013 revenue growth S&P 500

John Butters of FactSet points out that of the 19 companies that have reported earnings to date for Q4 2013, 63% have reported earnings above the mean estimate and 58% have reported sales above the mean estimate.

S&P 500 EPS guidance

FactSet analyst notes for Q4 2013, 94 companies have issued negative EPS guidance, while 13 companies have issued positive EPS guidance. The following graph reveals both the negative and positive EPS guidance issued by various industries:

EPS guidance S&P 500

The analyst points out that the current 12-month forward P/E ratio is 15.4, based on Thursday’s closing price of 1842.02.

The following table highlights sector-level forward 12-month P/E ratios:

12-month forward PE ratios S&P 500

As can be seen from the following graph, the forward 12-month EPS estimate is pegged at $119.66.

12-month forward EPS S&P 500

The following graph highlights sector-level forward 12-month P/E ratios:

Sector level PE ratios S&P 500

About the Author

Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports