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S&P 500 Earnings – 2Q16 EPS & Growth Rate

S&P 500 Earnings – 2Q16 EPS & Growth Rate by Lindsey Bell, S&P Global Market Intelligence

Q2 Earnings for S&P 500 Kicks-Off

  • Aggregate Q2 2016 S&P 500 earnings are estimated at $28.18, representing a decline of 5.4% year-over-year, for the fourth quarterly decline in a row.
  • Alcoa will unofficially kick-off the second quarter earnings season after the close.
  • Only four of 10 S&P sectors are projected to have positive earnings growth for Q2, with consumer discretionary (9.4%), industrials (6.6%), healthcare (3.0%), and utilities (3.0%) leading.
  • The energy sector (-80.7%) once again is expected to post the largest decline in growth, though the decline is an improvement from first quarter results.
  • Other sectors with large declines in growth are financials (-8.6%), materials (-7.7%), and information technology (-5.3%).
  • Excluding the energy sector drag, S&P 500 EPS growth would still decline 0.9% in Q2.
  • The earnings beat rate in the first quarter is currently 57%, below the historic average of 66%, though only 23 companies have reported results thus far.
  • From a valuation perspective, the S&P 500 is trading at 17.6x on a forward 12 month price-to-earnings ratio, a premium to the fifteen year average.
  • This week, 12 companies are slated to report results including, Yum! Brands, JPMorgan and Citigroup.

S&P Euro 350 CY 2016 & 2017 Earnings Expectations

  • Analysts currently expect earnings growth for calendar year 2016 and 2017 to come in at -4.5% and 14.0%, respectively. Since last Monday, growth estimates improved by 80 bps for 2016 but contracted by 30 bps for 2017. These growth rates correspond to earnings per share of €86.55 and €98.70, respectively.
  • Three of 10 sectors within the S&P Euro 350 are expecting earnings growth in 2016, with healthcare (2.8%) leading, followed by consumer discretionary (1.9%) and telecommunications (1.4%). Energy (-24.3%) and financials (-15.8%) are expected to have the largest contractions in growth.

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