💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

How Does S&P 500 Revenue Growth Look For Q2 ’17 And Full-Year 2017 ?

Published 05/17/2017, 12:36 AM
Updated 07/09/2023, 06:31 AM
US500
-
DXY
-

S&P 500 earnings are the “straw that stirs the drink” as Reggie Jackson once said about himself during one of the late 1970’s World Series runs by the New York Yankees slugger.

However, revenue growth is just as important.

Something caught my eye looking at S&P 500 earnings data and I thought it was worth sharing with readers.

Earnings Data

David Aurelio of Factset provided these tables yesterday.

Six weeks into the 2nd quarter, 2017, what I’m looking at are sector(s) that have seen upward revisions to expected revenue growth as of May 15 ’17, versus the April 1 for Q2 ’17 (pre release) data:

Here is the list from the above first table, (i.e. upper left-hand corner):

  • Consumer Discretionary: +3.9% as of 5/15/17 vs +3.8% as of 4/1/17 (not a big jump, but still an increase)
  • Industrial’s: +3.2% as of 5/15/17 vs +2.5% as of 4/1/17
  • Basic Materials: +6.3% as of 5/1/51/17 vs +5.9% as of 4/1/17
  • Real Estate: +4.9% as of 5/151/7 vs +4.5% as of 4/1/17

Source: Thomson Reuters I/B/E/S and remember this is for Q2 ’17 revenue estimates.

Maybe more importantly, and a bigger question, “How has full-year 2017 sector revenue estimates changed since April 1 ’17 ?” (Same period i.e. 5/15/17 vs 4/1/17)

  • Consumer Discretionary: +5.2% vs +4.9%
  • Consumer Staples: +2.5% vs +2.4%
  • Industrial’s: +4.5% vs +3.6%
  • Basic Mat: +6.3% vs +5.2%
  • Real Estate: +6.2% vs +5.7%
  • Technology: +7.2% vs +6.9% (what’s critical about Tech’s revenue revisions is that it’s unrelated to cash repatriation.)
  • S&P 500 (ex-Energy): +4.4% vs +4.2%

Analysis / conclusion: The upward revenue revisions could be weaker dollar related, (weaker dollar is a plus as we learned from October ’14 through March ’15, when the US dollar soared a record amount in 6 months time, and listened to management’s whine about “f/x” and “constant currency” in the Q1 ’15 conference calls) but it could also be due to faster overall business growth expected, that we don’t yet see in GDP. Remember these bottom-up forecasts are one of the best leading indicators we have for forward stock prices and the EPS and revenue estimates take a LOT of variables into consideration.

The other aspect to this analysis readers need to remember is that “normally” the pattern is DOWNWARD or negative EPS and revenue revisions as we begin to track future quarters. Estimates normally start high and get revised lower until just prior to a quarter reporting and then the estimates start to turn higher.

The fact that we as investors are seeing HIGHER revisions today is very much a positive.

Tech, Basic Materials, Industrials – there is definitely a cyclical component to what revenue revisions are telling us.

Factset has some good data as well – more to come on Wednesday. Don’t want to overload readers.

The Street is turning more bullish on 2017 S&P 500 revenue growth in general – definitely not a bad sign.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.