Weekly Earnings Update: Can Q4 ’16 Earnings Top Q3 ’16 ?

Here was the forecast for Q3 ’16 at the start of Q4 ’16. Per Thomson Reuters, which is my primary earnings data provider, actual Q3 ’16 earnings grew 4.3%, but Ex-Energy, SP 500 earnings grew 7.9%.

Pretty good growth.

For readers, the important aspect to Q4 ’16’s earnings is that the Energy Sector is no longer a drag on the SP 500 and that SP 500 earnings and revenue will look more “normal” relative to the last 10 – 15 years, than the period from late 2014, through Q3 ’16.

Here is a table (see below) from David Aurelio of Thomson sent in late November ’16. Note how the influence of Energy is ending with Q3 ’16.

What’s interesting to me looking at the data again is to note how the revenue growth slowly ebbed as we moved away from the Financial/Mortgage/Housing Crisis bounce, moving into 2011, 2012, etc. If the President-elect and Congress can manage to NOT fritter away the pro-economic-growth opportunity American voters have provided them, investors could see a sustained window of healthy, and above average (at least in terms of the last 8 years) earnings and revenue growth.

Much can go wrong, simply due to President-elect Trump being the “known unknown” and how he will actually come down on critical issues, but the Cabinet appointments continue to indicate a very pro-economic-growth, pro-business and ultimately pro-market tendency.

We’ll know pretty soon. (Readers are owed an earnings update on the Health Care sector given that it was the only sector in ’16 with a negative return. Need to post that in the next few days.)

 

S&P 500: Y/Y Blended Growth Rates
Source: Thomson Reuters I/B/E/S
  Earnings Revenue
Period S&P 500 Ex-Energy S&P 500 Ex-Energy
2018Q2E 11.1% 10.1% 4.4% 4.7%
2018Q1E 11.6% 10.2% 5.4% 4.5%
2017Q4E 14.3% 11.7% 5.6% 3.9%
2017Q3E 9.7% 6.5% 6.0% 3.3%
2017Q2E 11.9% 8.0% 6.1% 3.8%
2017Q1E 14.1% 9.7% 8.0% 5.2%
2016Q4E 6.2% 6.2% 4.7% 4.4%
2016Q3E 4.2% 7.9% 2.6% 4.5%
2016Q2 -2.1% 2.2% -0.4% 2.5%
2016Q1 -5.0% 0.4% -1.7% 1.5%
2015Q4 -2.9% 3.4% -3.5% 0.9%
2015Q3 -0.8% 6.3% -4.4% 1.0%
2015Q2 1.3% 8.9% -3.5% 1.5%
2015Q1 2.2% 10.3% -3.1% 2.4%
2014Q4 7.0% 10.5% 2.1% 4.8%
2014Q3 10.3% 10.3% 4.1% 5.3%
2014Q2 8.6% 7.5% 4.7% 4.9%
2014Q1 5.6% 6.5% 2.9% 3.4%
2013Q4 9.9% 12.6% 1.0% 1.7%
2013Q3 6.0% 8.0% 3.4% 3.7%
2013Q2 4.9% 6.7% 2.2% 3.6%
2013Q1 5.4% 6.1% 0.0% 3.2%
2012Q4 6.2% 6.2% 3.6% 6.3%
2012Q3 0.1% 2.9% -0.8% 2.0%
2012Q2 8.3% 13.3% 0.9% 3.6%
2012Q1 8.1% 9.2% 5.0% 5.2%
2011Q4 9.2% 8.6% 6.9% 5.7%
2011Q3 18.0% 13.0% 11.1% 8.6%
2011Q2 12.1% 8.3% 13.6% 10.6%
2011Q1 18.9% 16.4% 9.4% 6.7%
2010Q4 37.0% 36.3% 8.2% 6.9%
2010Q3 31.2% 31.0% 7.5% 6.2%
2010Q2 38.8% 33.4% 8.8% 6.4%
2010Q1 58.3% 57.4% 11.2% 8.1%
2009Q4 205.6% 414.6% 7.9% 8.9%
2009Q3 -14.7% 0.9% -10.0% -2.4%
2009Q2 -27.3% -17.6% -14.2% -6.6%
2009Q1 -35.5% -30.1% -11.4% -5.5%
2008Q4 -67.0% -77.6% -9.5% -7.3%
2008Q3 -19.0% -32.2% 8.1% 2.1%
2008Q2 -22.1% -29.7% 10.1% 4.8%
2008Q1 -17.5% -24.2% 7.6% 3.6%

 

Source: Thomson Reuters

Expected Q4 ’16 Earnings by sector ranked from fastest to slowest expected growth:

  • Financial’s +15.4%
  • Utilities +10.5%
  • Technology +7.8%
  • Consumer Staples +6.1%
  • SP 500 +6.1%
  • Health Care +5.7%
  • Materials +5%
  • Energy +4.9%
  • Consumer Discretionary +2.5%
  • Telco -0.7%
  • Real Estate -0.8%
  • Industrials -3.7%

Source: Thomson TWIE dated 12/30/16

Two surprises: why are utilities earnings so strong and why is Industrial earnings growth so weak ?

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