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S&P 500 1Q19 Earnings Recap: Consumer Discretionary Stocks Lead, But Still A Long Way To Go

May 17, 2019

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All Data and Information as of 05/17/2019 Market Close

 

  • First quarter earnings season for S&P 500 stocks inched near a close this week with 459 S&P 500 companies, or 91.8% of the index constituents, having reported quarterly financials as of Friday’s close.
     
  • S&P 500 Consumer Discretionary stocks have the bulk of quarterly financials to report still this season with just 66.7% of the sector index having announced earnings. With 21 constituents still yet to report financials, more than half of the first quarter earnings to be announced over the next few weeks will come from S&P 500 Consumer Discretionary stocks.

S&P 500 CY1Q2019 Earnings Release Sector Breakdown

  Average Sales Surprise Average EPS Surprise  Average Sales Growth Average Earnings Growth Number Reported Number In Index
S&P 500 Consumer Discretionary Index -0.32% 20.63% 3.76% 10.87% 42 63
S&P 500 Consumer Staples Index -0.40% 4.96% 2.36% 0.81% 27 33
S&P 500 Information Technology Index 0.51% 5.60% -1.17% -7.16% 57 68
S&P 500 Financials Index -0.16% 4.55% 2.65% 2.08% 67 67
S&P 500 Health Care Index 0.79% 5.76% 13.92% 9.16% 60 62
S&P 500 Industrials Index 0.33% 5.92% 3.10% 3.25% 69 70
S&P 500 Energy Index -2.05% 0.25% -0.72% -24.85% 29 29
S&P 500 Utilities Index -2.37% 1.82% 0.99% 5.37% 28 28
S&P 500 Materials Index 3.35% 14.79% -2.93% -16.94% 25 25
S&P 500 Communication Services Index -0.33% 9.19% 11.51% 13.56% 21 21
S&P 500 Real Estate Index 0.39% 2.77% 4.37% 6.94% 32 32
Total S&P 500 Index -0.03% 6.39% 4.49% 1.42% 459 500

Source: Bloomberg
 

  • Although the sector still has a long way to go until it is fully reported on, it is still worth noting that S&P 500 Consumer Discretionary stocks are the best performing from an earnings perspective so far this season.
     
  • Consumer Discretionary stocks in the S&P 500 have generated the best aggregate EPS surprise of 20.63% among S&P 500 sector indices. S&P 500 Consumer Discretionary Stocks’ earnings growth of 10.87%, meanwhile, is the second-best among S&P 500 sector indices.  
     
  • Although the average S&P 500 Consumer Discretionary company to report earnings beat analyst EPS expectations by more than 20%, the average reported sales for S&P 500 Consumer Discretionary companies have missed analyst estimates by 0.32%. Several things could be causing the discrepancy between the S&P 500 Consumer Discretionary Sector’s sales and earnings performance -- perhaps consumer discretionary stocks are buying back common stock, cutting costs, or taking other strategies to grow earnings.

S&P 500 Sector Index Multiples, Yields, and Projected EPS Growth

  Fwd 12M P/E Ratio T12M P/E Ratio T12M EBIT/EV T12M FCF Yield FWD 12M EPS Growth (%) 3 Year Fwd EPS CAGR
S&P 500 Consumer Discretionary Index 20.13x 23.54x 4.30% 4.01% 16.95% 12.61%
S&P 500 Consumer Staples Index 19.28x 20.25x 4.83% 3.75% 5.04% 5.12%
S&P 500 Information Technology Index 18.52x 21.13x 5.55% 4.92% 14.09% 10.43%
S&P 500 Financials Index 11.61x 12.99x 8.81% 5.10% 11.85% 8.19%
S&P 500 Health Care Index 14.81x 19.52x 4.59% 4.42% 31.85% 15.36%
S&P 500 Industrials Index 15.52x 16.98x 5.32% 3.38% 9.40% 8.94%
S&P 500 Energy Index 15.66x 16.49x 5.74% 3.53% 5.28% 7.17%
S&P 500 Utilities Index 18.52x 19.76x 4.01% -1.60% 6.71% 5.23%
S&P 500 Materials Index 15.79x 13.71x 5.65% 3.58% -13.22% 1.27%
S&P 500 Communication Services Index 16.68x 19.79x 4.71% 4.08% 18.68% 12.28%

Source: Bloomberg
 

  • Purely from a growth perspective, S&P 500 Communication Services stocks are the best performing among S&P 500 sectors. The sector has generated the best aggregate earnings growth of 13.56% and the second-best aggregate sales growth of 11.51%. Additionally, all 21 of sector index constituents have announced quarterly earnings!

S&P 500 Sector Index ROE Dupont Breakdown

  T12M ROE T12M Operating Margin T12M Net Profit Margin T12M Sales / Assets Assets / Equity
S&P 500 Consumer Discretionary Index 28.94% 8.09% 6.21% 1.00x 4.52x
S&P 500 Consumer Staples Index 24.68% 8.61% 6.60% 1.11x 3.26x
S&P 500 Information Technology Index 34.12% 23.65% 20.43% 0.58x 2.85x
S&P 500 Financials Index 11.21% 22.26% 17.17% 0.07x 8.06x
S&P 500 Health Care Index 16.24% 8.95% 6.74% 0.86x 2.81x
S&P 500 Industrials Index 22.22% 10.56% 7.69% 0.68x 3.89x
S&P 500 Energy Index 9.34% 8.70% 6.73% 0.69x 1.92x
S&P 500 Utilities Index 8.64% 17.19% 10.11% 0.23x 3.60x
S&P 500 Materials Index 10.08% 10.97% 7.28% 0.63x 2.28x
S&P 500 Communication Services Index 15.16% 17.57% 13.64% 0.41x 2.52x

Source: Bloomberg
 

  • It’s important to note the underperformance of S&P 500 Energy stocks and S&P 500 Utilities stocks during this earnings season. The entirety of both of these S&P 500 sectors’ constituents have announced their quarterly financials for the first quarter.
     
  • A quick glance reveals that S&P 500 energy stocks appear to be the worst performing this season. The Energy sector’s aggregate earnings growth of –24.85% is abysmal, especially when taking into account that analysts expect the sector to grow their forward 12-month earnings by 7.17% per annum over the next 3 years, seen in the middle table of this post. The S&P 500 Energy sector’s average sales surprise and EPS surprise are both the second-worst among S&P 500 sectors this season.  
     
  • S&P 500 Utilities stocks are not performing much better this earnings season. Although they look okay from a pure growth perspective, the sector’s average sales surprise and average EPS surprise are both the worst among S&P 500 sector indices.

 

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