Zacks Earnings Trends Highlights: All-Time Record Earnings in Q3 – November 2, 2017

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For Immediate Release

Chicago, IL – November 2, 2017 – Zacks Director of Research Sheraz Mian says, “Positive revenue momentum and favorable revisions trends in estimates for the current period are the two standout features of this earning season.”

All-Time Record Earnings in Q3

Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>

Here are the key points:

•    Positive revenue momentum and favorable revisions trends in estimates for the current period are the two standout features of this earning season.  

•    Total earnings for the 327 S&P 500 members that have reported already are up +7.8% from the same period last year on +6.5% higher revenues, with 74.9% beating EPS estimates and 65.7% beating revenue estimates.

•    Positive surprises are more numerous relative to historical periods, with the proportion of companies beating revenue estimates tracking notably above other recent comparable periods.

•    While Finance sector results have been below average, this earnings season is turning out to be a good one for the Industrial Products, Technology, Construction and Medical sectors.

•    For the quarter as whole, total Q3 earnings for the S&P 500 index are expected to be up +5.6% from the same period last year on +5.5% higher revenues. With double-digit growth in each of the first two quarters of the year and earnings growth in the last quarter of the year currently expected at +7.3%, the Q3 growth is on track to be the lowest this year.

•    The revisions trend for Q4 estimates continues to be favorable, with earnings estimates holding up a lot better relative to other comparable periods.

•    For full-year 2017, total earnings for the S&P 500 index are expected to be up +7.1% on +4.7% higher revenues, which would follow +0.7% earnings growth on +2.2% higher revenues in 2016. Index earnings are expected to be up +11.5% in 2018 and +9.4% in 2019.
 
•    Earnings growth is expected to turn positive in Q3 for the small-cap S&P 600 index, with total earnings for the index expected to be up +3.8% from the same period last year on +5% higher revenues. This would follow persistent earnings declines for the small-cap index – S&P 600 earnings growth was negative in 3 of the last 4 quarters.

•    Strong growth from the Finance, Technology and Energy sectors are driving the small-cap growth. The Finance sector’s role is particularly notable in the small-cap index, with Q3 earnings growth dropping to -0.2% (from +3.8%) on an ex-Finance basis.

We now have Q3 results from 327 S&P 500 members that combined account for 71.2% of the index’s total market capitalization. Total earnings for these 327 index members are up +7.8% from the same period last year on +6.5% higher revenues, with 74.9% beating EPS estimates and 65.7% beating revenue estimates.

What these comparison charts shows are:

•    The earnings growth rate (+7.8%) for these 327 index members is lower than what we saw from the same group of companies in Q2 and about the same as the 4-quarter average.
•    The Q3 revenue growth rate (+6.5%) represents an acceleration from all other periods in the chart.
•    The proportion of positive EPS beasts (74.9%) is above the comparable periods in the chart above.   
•    Revenue beats for these 327 index members at 65.7% is slightly below the preceding quarter, which itself was an unusually high revenue beat rate relative to historical periods.

The most notable element of the results thus far is the momentum on the revenue side.

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