A combination of Energy sector weakness, a strong u.s. dollar and anemic global growth — particularly in China and other emerging markets — has been clouding the earnings picture in recent quarters… and we are seeing a replay of the same themes in the ongoing Q2 earnings season as well. The barrage of Q2 earnings announcements this week – almost 1200 companies are releasing results this week, including 90 S&P 500 members – will likely further confirm what we have seen already this earnings season.
Growth is hard to come by, few companies are able to meet consensus revenue estimates and guidance continues to be on the weak side, causing estimates for the current period to come down.
The Scorecard
As of July 31st, we have seen Q2 result from 354 S&P 500 members that combined account for 78.0% of the index's total market capitalization. Total earnings for these companies are down -2.5% on -4.4% revenue losses, with 69.9% beating EPS estimates and 50.4% coming ahead of revenue expectations.
Figure 1 below shows the current Scorecard for the 354 index members that have reported results.
Figure 1: 2015 Q2 Scorecard (as of 7/31/2015)
Putting Q2 Results in Context
Figure 2 below shows the comparison of the results thus far with what we have been seeing from the same group of 354 companies in other recent quarters.
Figure 2: 2015 Q2 Results Compared
The left-hand side chart compares the earnings and revenue growth rates for these 354 S&P 500 members with what these same companies reported in the preceding quarter and the average growth rates for these companies in the preceding four quarters (the 4-quarter average is through 2015 Q1). The right-hand side chart does the same comparison for these 354 S&P 500 members, but compares only the earnings and revenue beat ratios.
Here are the takeaways from looking at this chart
