The last S&P 500 company has released its earnings report, and overall, the decline wasn’t as bad as was expected at the beginning of third quarter earnings season. However, the beat rate leaves something to be desired. Now that all the third quarter reports are in, total S&P 500 earnings are at $29.64 per share.
Finalizing Q3 S&P 500 earnings numbers
S&P Capital IQ Senior Analyst Lindsey Bell reports that the index’s total earnings ended up declining 1.39%, marking the first EPS decline for the S&P 500 since the third quarter 2009. Seven of the S&P’s ten sectors saw positive growth, with the Energy sector continuing to be the biggest weight.
Chilton Capital's REIT Composite was up 6.1% last month, compared to the MSCI U.S. REIT Index, which gained 4.4%. Year to date, Chilton is up 6.3% net and 6.5% gross, compared to the index's 8.8% return. The firm met virtually with almost 40 real estate investment trusts last month and released the highlights of those Read More
However, at the beginning of October, analysts were projecting a 4.75% decline. Now it looks like Wall Street’s caution has shifted to the fourth quarter, as analysts are predicting a 4.81% decline on the bottom line for the S&P. At the beginning of October, they were projecting only a decline of 0.45%.
Analysts are expecting a return to growth in the first quarter, however, with a 2.18% increase projected. That’s still a significant decline from where expectations were a year ago, however.
Earnings beat rate below average
According to Bell, the beat rate for the third quarter is at 64% with 320 companies reporting beats, 105 posting misses, and 74 reporting in-line results. The historic average beat rate is 66%. The Telecommunications sector did well, but the Healthcare sector is perhaps the best-performing in terms of earnings as it racked up 45 beats and 5 misses. Consumer Staples also did well in earnings beats.
We did see a trend of weaker than expected sales, however, across multiple sectors. Only four sectors posted in-line revenues. Healthcare was the best-performing sector in revenue with 35 beats and only 19 misses. Consumer Staples was split with 18 misses and 18 beats, and Financials was also split with 42 beats and 42 misses. Overall, more S&P 500 companies missed on sales than beat expectations.
Energy sector to turn a corner
Looking to forward projections for the next two quarters, Bell reports that earnings in the Energy sector are expected to plunge even further in the fourth quarter before turning a corner. However, while only three sectors in the S&P 500 posted negative earnings growth in the third quarter, analysts are expecting five sectors to see negative growth in the fourth quarter, adding the Information Technology and Utilities sectors into the mix.
For the first quarter of 2016, analysts are only expecting the Energy sector to see negative growth.
And here’s a look at past and future projections through next year.
Charts in this article are courtesy S&P Capital IQ.