EC Earnings Season Shows Strong Revenue Momentum

We are in the heart of the Q2 earnings season, with almost a thousand companies on the docket to come out with results this week, including 139 S&P 500 members. With more than half of S&P 500 results already out, we will have seen results from more than 80% of the large-cap index’s total membership by the end of this week.

A few high profile negative surprises from the likes of Facebook (FB) and Netflix (NFLX) notwithstanding, the Q2 earnings season has sustained the positive momentum in place over the last few quarters. Overall growth is steadily moving towards the Q1 level, with all around positive surprises and plenty of momentum on the revenues side. Importantly, while estimates for Q3 have nudged down a bit in recent days, they are holding up nicely.

The blended Q2 earnings growth (blending the reported with the unreported) at present of +23.6% is below the preceding quarter’s +24.6% level. But given the momentum we have seen from the 265 S&P 500 members that have reported already, both in terms of growth as well as positive surprises, we can see Q2 earnings growth moving past the Q1 level as the remainder of this earnings season unfolds.

Let me share one standout feature the Q2 results thus far before we get into the scorecard. This standout feature pertains to revenues, both in terms of growth rates as well as the proportion of companies beating revenue estimates. You can see in the comparison charts below.

On the revisions front, estimates for Q3 have come down a bit but otherwise remain stable.

Q2 Earnings Season Scorecard (as of July 27th, 2018)

We now have Q2 results from 265 S&P 500 members that combined account for 66.2% of the index’s total market capitalization, with total earnings for these 265 companies up +23.6% from the same period last year on +10.1% higher revenues, with 80.8% of the companies beating EPS estimates, and 72.1% surpassing revenue estimates.

The comparison charts below put results from these 265 index members in a historical context.

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Note: Sheraz Mian regularly provides earnings analysis on Zacks.com and appears frequently in the print and electronic media. In addition to this Earnings Preview article, he publishes the  more

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