{"id":6806,"date":"2017-04-05T20:14:32","date_gmt":"2017-04-05T20:14:32","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=6806"},"modified":"2017-04-05T20:14:32","modified_gmt":"2017-04-05T20:14:32","slug":"look-for-12-14-sp-500-earnings-growth-in-q1-17","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=6806","title":{"rendered":"Look for 12% – 14% SP 500 Earnings Growth in Q1 ’17"},"content":{"rendered":"

 <\/p>\n

The following table from Thomson Reuters shows the current market cap weighting of each of the 11 sectors of the SP 500.<\/p>\n

 <\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\u00a0<\/strong><\/td>\n\u00a0<\/strong><\/td>\nEARNINGS<\/strong><\/td>\n<\/tr>\n
Sector<\/strong><\/td>\nMCap<\/strong><\/td>\n17Q1<\/strong><\/td>\n17Q2<\/strong><\/td>\n17Q3<\/strong><\/td>\n17Q4<\/strong><\/td>\n18Q1<\/strong><\/td>\n<\/tr>\n
\n
    \n
  • Cons Disc<\/li>\n<\/ul>\n<\/td>\n
12.3%<\/td>\n10.5%<\/td>\n11.4%<\/td>\n11.1%<\/td>\n11.2%<\/td>\n10.6%<\/td>\n<\/tr>\n
Consumer Staples<\/td>\n9.3%<\/td>\n8.0%<\/td>\n8.2%<\/td>\n8.3%<\/td>\n7.9%<\/td>\n7.8%<\/td>\n<\/tr>\n
Energy<\/td>\n6.6%<\/td>\n3.0%<\/td>\n3.8%<\/td>\n4.3%<\/td>\n4.2%<\/td>\n4.8%<\/td>\n<\/tr>\n
Financials<\/td>\n14.3%<\/td>\n18.9%<\/td>\n18.4%<\/td>\n18.1%<\/td>\n17.6%<\/td>\n17.9%<\/td>\n<\/tr>\n
Health Care<\/td>\n13.9%<\/td>\n16.6%<\/td>\n15.9%<\/td>\n15.4%<\/td>\n14.6%<\/td>\n15.9%<\/td>\n<\/tr>\n
Industrials<\/td>\n10.1%<\/td>\n8.4%<\/td>\n10.3%<\/td>\n10.4%<\/td>\n10.0%<\/td>\n8.9%<\/td>\n<\/tr>\n
Information Technology<\/td>\n22.1%<\/td>\n21.7%<\/td>\n20.0%<\/td>\n20.3%<\/td>\n24.5%<\/td>\n21.8%<\/td>\n<\/tr>\n
Materials<\/td>\n2.8%<\/td>\n3.1%<\/td>\n3.2%<\/td>\n2.5%<\/td>\n2.4%<\/td>\n3.1%<\/td>\n<\/tr>\n
Real Estate<\/td>\n2.9%<\/td>\n2.7%<\/td>\n2.6%<\/td>\n2.5%<\/td>\n2.5%<\/td>\n2.6%<\/td>\n<\/tr>\n
Telecommunication Services<\/td>\n2.4%<\/td>\n3.6%<\/td>\n3.3%<\/td>\n3.1%<\/td>\n2.7%<\/td>\n3.3%<\/td>\n<\/tr>\n
Utilities<\/td>\n3.2%<\/td>\n3.6%<\/td>\n2.8%<\/td>\n4.0%<\/td>\n2.4%<\/td>\n3.4%<\/td>\n<\/tr>\n
Source: Thomson Reuters I\/B\/E\/S<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

(One caveat to readers: the non market cap columns for Q1 ’17 – Q1 ’18 are NOT expected growth rates but expected earnings weights for the sector. )<\/p>\n

Here is how the sectors rank from strongest to weakest earnings growth in Q1 ’17:<\/p>\n

    \n
  • Financial’s:<\/strong> <\/em>+15.4%<\/li>\n
  • Technology:<\/strong><\/em> +14.8%<\/li>\n
  • Basic Materials:<\/strong><\/em> +12.3%<\/li>\n
  • Health Care;<\/strong><\/em> +2.7%<\/li>\n
  • Cons Spls:<\/strong><\/em> +2.5%<\/li>\n
  • Real Estate:<\/strong> <\/em>+1.6%<\/li>\n
  • Utilities:<\/strong><\/em> +0.9%<\/li>\n
  • Cons Disc:<\/strong><\/em> -1.4%<\/li>\n
  • Telco:<\/strong> <\/em>-2.8%<\/li>\n
  • Industrials:<\/strong><\/em> -5.6%<\/li>\n
  • Energy:<\/strong><\/em> +605%<\/li>\n<\/ul>\n

    SP 500: +10.1% earnings growth expected in Q1 ’17\u00a0<\/strong><\/em><\/p>\n

    If the usual pattern reveals itself again in Q1 ’17, and the analysts have reduced their expected earnings growth expectations too much, investors should see the typical 3% – 4% increase or bump between the “estimated” and actual growth rates for the key benchmark.<\/p>\n

    Investors \/ readers \/ earnings watchers could see a 12% – 14% growth rate when Q1 ’17 is ultimately complete by the end of June ’17.<\/p>\n

    If the SP 500 has discounted all this expected growth is the key issue.<\/p>\n

    The first table from Thomson also shows the importance of market cap weight to the benchmark: Tech and Financials alone account for about 40% of the SP 500 market cap.<\/p>\n

    I listed Energy at the bottom of the 2nd table since – while the percentage growth rates look large, the denominator is small using 2016 comp’s – and Energy’s expected “earnings weight” for Q1 ’17 is just 3%.<\/p>\n

    The patterns are the patterns. Pay attention when they dont work, but in terms of SP 500 earnings for Q1 ’17 and 2017 as a whole, the earnings story looks very good.<\/p>\n

    Thanks to David Aurelio at Thomson Reuters I\/B\/E\/S.<\/p>\n

    Thanks for reading.<\/p>\n

     <\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

      The following table from Thomson Reuters shows the current market cap weighting of each of the 11 sectors of…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[9,98],"tags":[],"class_list":["post-6806","post","type-post","status-publish","format-standard","hentry","category-sp-500","category-sector-earnings-growth-estimates"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/6806","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6806"}],"version-history":[{"count":3,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/6806\/revisions"}],"predecessor-version":[{"id":6809,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/6806\/revisions\/6809"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6806"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6806"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6806"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}