Rather than put the summary at the bottom as is usually done, the important observations from the data from both Factset and IBES by Refinitiv data are found at the top this week:
- Strength in Energy estimates is still amazing. Crude oil fell 22% in November and “expected” Energy earnings and revenue growth still show solid trends through these last 10 weeks of the 4th quarter. Revenue growth looks particularly solid.
- Communications Services too of which a big part of the sector is Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL). Looking at both Factset and IBES revenue data, Q4 ’18 expected revenue for Communications Services has been revised higher over the last 10 weeks. (Facebook announced a big buyback late Friday, December 7 after the market close and the stock was trading down slightly after the news.)
- Basic Materials is seeing higher revenue revisions for Q4 ’18 by both IBES and Factset but lower estimates earnings growth. That typically implies margin pressure but i don’t follow a lot of companies in the sector.
- Both IBES and Factset are expecting 6.5% revenue growth for Q4 ’18.
- IBES by Refinitiv doesn’t have a 2019 revenue estimate yet but Factset published one and they are expecting 5.6% revenue growth for 2019, up from 5.5% as of 9/30/18. Both earnings services are expected 8.5% S&P 500 earnings growth for 2019, down from around 10% at the beginning of the quarter. Both services are essentially in agreement about 2019 estimates as of 12/7/18.
Summary / Conclusion: Revenue estimates for Q4 ’18 have seen little downward revisions by either IBES by Refinitiv or by Factset in the last 10 weeks, with full-year 2019 has softened a little from an already-reduced expectations after 2018’s tax-reform influence. I hate to sound like a broken record, but I dont see much to worry about in either Q4 ’18 or 2019 (yet) from an S&P 500 earnings or revenue perspective.
Maybe it happens with Q4 ’18 earnings releases and 2019 full-year guidance in January ’19.
The point is whatever is happening with the stock market these days, I dont think it is earnings related.
Remember, when the 1987 Crash occurred, S&P 500 earnings fell 5% in 1987, but grew 15% and 46% in 1988, and 1989.
Sometimes the market does what it does, in spite of S&P 500 earnings and revenue growth.
IBES by Refinitiv – S&P 500 Earnings Growth estimates by Sector:
- Cons Disc: 13% today vs 17.8% as of 10/1
- Cons Spls: 2.6% today vs 6.7% as of 10/1
- Energy: 81% today vs 81.4% as of 10/1
- Financials: 24.2% today vs 28.2% as of 10/1
- Health Care: 11.5% today vs 13.1% as of 10/1
- Industrials: 24.6% vs 31% as of 10/1
- Basic Mat: 6.2% vs 14.9% as of 10/1
- Real Estate: 7.2% vs 9.8% as of 10/1
- Technology: 11.7% vs 13.7% as of 10/1
- Comm Services: 17.8% vs 20.6% as of 10/1
- Utilities: -9.4% vs -4% as of 10/1
- S&P 500: 16.8% today vs 20.1% as of 10/1
IBES by Refinitiv – S&P 500 Revenue Growth by Sector:
- Cons Disc: 4.2% today vs 5.1% as of 10/5
- Cons Spls: 1.8% today vs 2.2% as of 10/5
- Energy: 19.8% today vs 20.1% as of 10/5 (note Energy revenue)
- Financials: 4% today vs 4.2% as of 10/5
- Health Care: 6.3% today vs 5.6% as of 10/5
- Industrials: 5.9% vs 6.7% as of 10/5
- Basic Mat: 10.5% vs 5.8%% as of 10/5 (note Basic Material revenue)
- Real Estate: 10.8% vs 10.6% as of 10/5
- Technology: 3.9% vs 5.3% as of 10/5
- Comm Services: 13.2% vs 11.2% as of 10/5 (note Communications Services revenue i.e. Facebook and Google)
- Utilities: -2.9% vs -3.7% as of 10/5
- S&P 500: 6.5% today vs 6.6% as of 10/5
Factset – S&P 500 Earnings Growth estimates for Q4 ’18: (Factset uses a 9/30 compare vs the 10/1 used by IBES by Refinitiv)
- Cons Disc: 11.4% today vs 16.2% as of 9/30
- Cons Spls: 2.5% today vs 6.7% as of 9/30
- Energy: 95.1% today vs 95.4% as of 9/30
- Financials: 15.9% today vs 19.9% as of 9/30
- Health Care: 10.6% today vs 11.7% as of 9/30
- Industrials: 14.5% vs 20.7% as of 9/30
- Basic Mat: 10% vs 17.6%% as of 9/30
- Real Estate: 8.8% vs 9.1% as of 9/30
- Technology: 7.1% vs 9.3% as of 9/30
- Comm Services: 13.3% vs 16.4% as of 9/30
- Utilities: 1.3% vs 10.2% as of 9/30
- S&P 500: 13.4% today vs 16.7% as of 9/30
Factset – S&P 500 Revenue Growth estimates for Q4 ’18: (Factset uses a 9/30 compare vs the 10/5 used by IBES by Refinitiv)
- Cons Disc: 4.8% today vs 5.9% as of 9/30
- Cons Spls: 2.7% today vs 2.5% as of 9/30
- Energy: 15.8% today vs 13.7% as of 9/30 (note Energy revenue)
- Financials: 4.5% today vs 5.9% as of 9/30
- Health Care: 5.5% today vs 5.8% as of 9/30
- Industrials: 5.5% vs 6.7% as of 9/30
- Basic Mat: 10.5% vs 5.7%% as of 9/30 (note Basic Material revenue)
- Real Estate: 11.1% vs 10.7% as of 9/30
- Technology: 3.9% vs 5.2% as of 9/30
- Comm Services: 19.8% vs 18.8% as of 9/30 (note Communications Services revenue i.e. Facebook and Google)
- Utilities: -1.1% vs -4.8% as of 9/30
- S&P 500: 6.8% today vs 6.8% as of 9/30