Thomson Reuters provided some useful earnings data on the SP 500’s Technology sector, so this is an update to this blog post of two days ago.
Here is an updated table showing Technology sector’s expected EPS growth, with and without Apple.
| Quarter | Apple EPS Growth | Tech EPS growth | Tech ex-Apple |
| Q2 2016 | -23.2% | -1.2% | 6.9% |
| Q3 2016 | -16.1% | 3.3% | 8.5% |
| Q4 2016 | -5.3% | 4.7% | 8.7% |
| Q1 2017 | 13.0% | 14.6% | 15.0% |
Source: ThomsonReuters data dated 8/16/16
From an investment or portfolio manager standpoint, the Technology sectors earnings growth should outperform the SP 500’s expected earnings growth, and Tech, Ex-Apple, should outperform both the SP 500 and Apple as an individual company.
In addition, Apple’s fiscal ’17 and ’18 EPS and revenue revisions have turned positive – an important sign for relative strength.
For new readers, scan www.fundamentalis.com for Tech and Apple related posts the last 4 weeks.
This end-game for this analysis is that – for those bearish here and expecting a correction in the next 4 – 6 weeks, Technology should offer some relative strength and a sector to hide in for those skittish the tape.
For those with a longer time horizon, as I have for clients, looking through year-end and into the Q1 ’17, which will then lap the very weak Q1 ’16, Technology should offer the potential for out-performance.
These are just opinions, so invest based on your own comfort level and estimates do change daily.
(Long Apple, and overweight Technology as a sector)