How do 3rd Quarter Estimates Look ?

Thomson Reuters data (by the numbers):

  • Fwd 4-qtr est: $137.83 vs last week’s $138.05
  • P.E ratio: 18x
  • PEG ratio: 1.88x
  • SP 500 earnings yield: 5.51%
  • Year-over-year growth of the fwd estimate: +9.63% vs last week’s +9.69%

Source: Thomson Reuter’s “This Week in Earnings” dated 9/15/17

Quick look at Q3 ’17 earnings estimates by sector: 

  • Energy: +134.8%
  • Technology: +9.5%
  • Industrial’s: +6.0 (guess someone forgot to tell GE)
  • SP 500: +6%
  • Health Care: +3.7%
  • Financials: +3.6% (trading losses in Q3 pulled numbers way down, Citi, Goldman talked about Q3 trading results this week)
  • Real Estate: +3.4%
  • Cons Spls: +2.7%
  • Basic Mat: +0.6%
  • Cons Disc: -0.1%
  • Telco: -1.1%
  • Utilities: -2%

The only sector to show upward revisions to expected growth rates for Q3 ’17 is Technology. Industrial’s estimates have held in well. Telco is slightly higher from the July 1 compare, but Telco is just less negative, and not positive.

I’m a believer that the SP 500 discounts earnings 6 – 9 months forward, so the 3rd quarter is already “in” the market, but readers can see the numbers for themselves.

Apple is still very much a big influence on the Tech sector and the SP 500 given its 4% market cap weight in the SP 500. As we wrote yesterday, the iPhone 8 release looks fine and the estimates revisions continue higher.

Our Financial’s post last Saturday, 9/9 was timely. The Financial sector had a good week this week, with the XLF +2.8% versus the SP 500’s +1.6%.  Client’s largest financial holding is Schwab (SCHW) and the stock was up 4% on the week.

Clients remain overweight Financial’s although that can change at any time, as well as the composition of the overweight. I continue to think the Financial sector offers more reward than risk, over the longer term.

Thanks for reading.

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