Here was the forecast for Q3 ’16 at the start of Q4 ’16. Per Thomson Reuters, which is my primary earnings data provider, actual Q3 ’16 earnings grew 4.3%, but ex-Energy, S&P 500 earnings grew 7.9%.
Pretty good growth.
For readers, the important aspect to Q4 ’16’s earnings is that the Energy Sector is no longer a drag on the S&P 500 and that S&P 500 earnings and revenue will look more “normal” relative to the last 10-15 years, than the period from late 2014 through Q3 ’16.
Here is a table (see below) from David Aurelio of Thomson, sent in late November ’16. Note how the influence of Energy is ending with Q3 ’16.
What’s interesting to me looking at the data again is to note how the revenue growth slowly ebbed as we moved away from the Financial/Mortgage/Housing Crisis bounce, moving into 2011, 2012, etc. If the President-elect and Congress can manage to NOT fritter away the pro-economic-growth opportunity American voters have provided them, investors could see a sustained window of healthy, and above average (at least in terms of the last eight years) earnings and revenue growth.
Much can go wrong, simply due to President-elect Trump being the “known unknown” and how he will actually come down on critical issues, but the Cabinet appointments continue to indicate a very pro-economic-growth, pro-business and ultimately pro-market tendency.
We’ll know pretty soon. (Readers are owed an earnings update on the Health Care sector given that it was the only sector in ’16 with a negative return. Need to post that in the next few days.)
| S&P 500: Y/Y Blended Growth Rates | ||||
| Source: Thomson Reuters I/B/E/S | ||||
| Earnings | Revenue | |||
| Period | S&P 500 | Ex-Energy | S&P 500 | Ex-Energy |
| 2018Q2E | 11.1% | 10.1% | 4.4% | 4.7% |
| 2018Q1E | 11.6% | 10.2% | 5.4% | 4.5% |
| 2017Q4E | 14.3% | 11.7% | 5.6% | 3.9% |
| 2017Q3E | 9.7% | 6.5% | 6.0% | 3.3% |
| 2017Q2E | 11.9% | 8.0% | 6.1% | 3.8% |
| 2017Q1E | 14.1% | 9.7% | 8.0% | 5.2% |
| 2016Q4E | 6.2% | 6.2% | 4.7% | 4.4% |
| 2016Q3E | 4.2% | 7.9% | 2.6% | 4.5% |
| 2016Q2 | -2.1% | 2.2% | -0.4% | 2.5% |
| 2016Q1 | -5.0% | 0.4% | -1.7% | 1.5% |
| 2015Q4 | -2.9% | 3.4% | -3.5% | 0.9% |
| 2015Q3 | -0.8% | 6.3% | -4.4% | 1.0% |
| 2015Q2 | 1.3% | 8.9% | -3.5% | 1.5% |
| 2015Q1 | 2.2% | 10.3% | -3.1% | 2.4% |
| 2014Q4 | 7.0% | 10.5% | 2.1% | 4.8% |
| 2014Q3 | 10.3% | 10.3% | 4.1% | 5.3% |
| 2014Q2 | 8.6% | 7.5% | 4.7% | 4.9% |
| 2014Q1 | 5.6% | 6.5% | 2.9% | 3.4% |
| 2013Q4 | 9.9% | 12.6% | 1.0% | 1.7% |
| 2013Q3 | 6.0% | 8.0% | 3.4% | 3.7% |
| 2013Q2 | 4.9% | 6.7% | 2.2% | 3.6% |
| 2013Q1 | 5.4% | 6.1% | 0.0% | 3.2% |
| 2012Q4 | 6.2% | 6.2% | 3.6% | 6.3% |
| 2012Q3 | 0.1% | 2.9% | -0.8% | 2.0% |
| 2012Q2 | 8.3% | 13.3% | 0.9% | 3.6% |
| 2012Q1 | 8.1% | 9.2% | 5.0% | 5.2% |
| 2011Q4 | 9.2% | 8.6% | 6.9% | 5.7% |
| 2011Q3 | 18.0% | 13.0% | 11.1% | 8.6% |
| 2011Q2 | 12.1% | 8.3% | 13.6% | 10.6% |
| 2011Q1 | 18.9% | 16.4% | 9.4% | 6.7% |
| 2010Q4 | 37.0% | 36.3% | 8.2% | 6.9% |
| 2010Q3 | 31.2% | 31.0% | 7.5% | 6.2% |
| 2010Q2 | 38.8% | 33.4% | 8.8% | 6.4% |
| 2010Q1 | 58.3% | 57.4% | 11.2% | 8.1% |
| 2009Q4 | 205.6% | 414.6% | 7.9% | 8.9% |
| 2009Q3 | -14.7% | 0.9% | -10.0% | -2.4% |
| 2009Q2 | -27.3% | -17.6% | -14.2% | -6.6% |
| 2009Q1 | -35.5% | -30.1% | -11.4% | -5.5% |
| 2008Q4 | -67.0% | -77.6% | -9.5% | -7.3% |
| 2008Q3 | -19.0% | -32.2% | 8.1% | 2.1% |
| 2008Q2 | -22.1% | -29.7% | 10.1% | 4.8% |
| 2008Q1 | -17.5% | -24.2% | 7.6% | 3.6% |
Source: Thomson Reuters
Expected Q4 ’16 Earnings by sector ranked from fastest to slowest expected growth:
- Financials +15.4%
- Utilities +10.5%
- Technology +7.8%
- Consumer Staples +6.1%
- S&P 500 +6.1%
- Health Care +5.7%
- Materials +5%
- Energy +4.9%
- Consumer Discretionary +2.5%
- Telco -0.7%
- Real Estate -0.8%
- Industrials -3.7%
Source: Thomson TWIE dated 12/30/16
Two surprises: why are Utilities' earnings so strong and why are Industrials' earnings growth so weak?