Expected SP 500 – and Technology – Revenue Growth Headed Into Q1 ’19 Earnings

Here is the historical and prospective SP 500 revenue growth per the latest IBES data:

  • Q4 ’19: +6.4% (est)
  • Q3 ’19: +5.0% (est)
  • Q2 ’19: +4.6% (est)
  • Q1 ’19: +5.0% (est)
  • Q4 ’18: +5.1% (actual)
  • Q3 ’18: +9.5% (actual)
  • Q2 ’18: +9.6% (actual)
  • Q1 ’18: +8.4% (actual)

Here is the Factset history:

  • Q4 ’19:
  • Q3 ’19:
  • Q2 ’19:
  • Q1 ’19: +4.8% (est)
  • Q4 ’18: +7.2% (actual)
  • Q3 ’18: +9.2% (actual)
  • Q2 ’18: +10.0% (actual)
  • Q1 ’18: +7.3% (actual)

For full-year 2019, Factset is expecting 5% revenue growth for the SP 500.

Technology revenue growth: (per IBES data dated 4/5/19)

  • Q4 ’19: +4.4% (est)
  • Q3 ’19: +0.8% (est)
  • Q2 ’19: -0.4%% (est)
  • Q1 ’19: -1.0 (est)
  • Q4 ’18: +1.8% (actual)
  • Q3 ’18: +10.8 (actual)
  • Q2 ’18: +12.2 (actual)
  • Q1 ’18: +16.2 (actual)

Here is the actual y/y revenue growth for Apple for the last 5 quarters:

  • 12/18: -5%
  • 9/18: +20%
  • 6/18: +17%
  • 3/18: +16%
  • 12/17: +13%

Current consensus revenue and EPS estimates for Apple expect a 6% y/y revenue drop for the iPhone giant, generating a 14% EPS decline in for the March ’19 quarter.

Summary / conclusion: On a separate spreadsheet, this blog tracks ACTUAL revenue and EPS growth by sector as provided by both IBES and Factset, and using the IBES data, since the 4th quarter of 2012, the SP 500 has averaged 3% revenue growth for the last 28 quarters.

The point being that looking at the expected revenue growth by quarter per IBES for 2019, the 5% average is still slightly above that longer-term average although certainly slower than 2018’s average revenue growth of 8%. Both IBES and Factset show healthy revenue growth in 2018 until the 4th quarter’s slowdown appeared.

Note too Technology’s torrid revenue growth for 2018 until the dramatic slowdown in Q4 ’18, and you have to think Apple is a big part of that drop.

Technology remains the largest sector within the SP 500 at 20% of the benchmark’s market value.

Per I/B/E/S by Refinitiv, Technology is the only sector expecting a y/y decline in revenue growth in Q1 ’19 at -1%.

My own opinion is that these Q1 ’19 estimates for both revenue and EPS will see upward revisions as we see Q1 ’19 earnings reports, particularly EPS, but the with consensus still expecting 5% revenue growth for 2019, that metric is still above the longer-term average.

Thanks for reading…

 

 

 

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