FactSet Earnings Insight: First Quarter Earnings in Review
The FactSet Earnings Insight report provides summary statistics for the latest trends in the earnings of the S&P 500 companies. The dynamic paper that is constantly updated to stay with the most recent earnings trends addresses earnings estimates, earnings guidance, revenues, and more. The report is available here and will remain updated on that link, so be sure to check back every quarter to see the new data posted by FactSet.
Earnings season for the first quarter of 2018 is coming to a close with 93 percent of S&P 500 companies having already reported. Looking back, the first earnings season of the year proved to be a success despite broad volatile trading. According to FactSet, 78 percent of S&P 500 companies reported a positive EPS surprise and 77 percent reported a positive sales surprise. If the 78 percent number holds, it will be the highest recorded by FactSet
So far, on average companies are posting earnings 7.5 percent above what is expected. This surprise rate is above the 1-year and 5-year average for surprises. Additionally, it will be the highest average earnings surprise since Q4 2010. Despite the surprises this quarter, 57 percent of the companies that reported from the S&P 500 issued negative EPS guidances. This statistic is surprising given that S&P 500 companies see double digit earnings growth through the entirety of 2018.
Valuations remain elevated. The forward P/E ratio of 16.4 is currently above the five-year average of 16.1. With oil running up to recent highs, the Energy sector reports the highest forward 12-month P/E at 20.2. On the lower end, two sectors that have underperformed since the beginning of the year, Telecom and Financials, report the lowest P/E ratios at 10.0 and 14.1.
Information Technology stocks in the S&P 500 had the best Q1 earnings out of all the sectors with 92 percent of companies reporting above estimates. Healthcare, Consumer Staples, and Materials all reported above-average estimate percentages above the S&P 500 beat average. Energy came in slightly below the average at 77 percent despite energy prices trending upwards. At the bottom, sectors with lower growth rates saw the lowest estimate beat rates, Utilities, Telecoms, and Real Estate.
On average, the S&P 500 saw 77 percent of its companies report revenues above the estimates, very similar to its earnings beat rate. Two sectors stuck out on the revenue side of things. Real Estate saw 85 percent report higher earnings than estimates this quarter despite having the lowest rate of beats. On the other hand, Healthcare saw below average rates of revenue beats despite being having a high rate of beats.
The report here for more in-depth analysis.