I think we can all agree that this was not a good week for earnings. The bad news from banks kept coming Friday when Goldman Sachs (GS) reported before the bell. The company posted Q4 EPS of $4.38 and revenues of $7.69B, both beating the street, but falling short of the Estimize consensus. The stock was punished shortly thereafter, falling as much as 2.5% after the markets opened, suggesting participants were looking for more. Investors have come to expect big beats from the bank; over the last 4 quarters it has surpassed the Wall Street consensus by an average of $0.83.
As with the other banks that reported this week, downtrodden results for Goldman Sachs had to do with a decrease in FICC trading revenues which fell 29% YoY, with overall revenues for the quarter coming in at their lowest level since Q3Â 2013, and declining 12% YoY. As a result of sorry results this week, the S&P 500 (SPY) financials sector has seen earnings growth dip to -2.3% from 5.0% at the beginning of the quarter. With that said, there were some bright spots within the sector, with PNC Financial Services Group (PNC), Charles Schwab Corp., (SCHW) and SunTrust Banks (STI) all beating on the bottom and top-line, with the exception of SunTrust which saw revenues come in-line with expectations.
Next week we’ll be looking out for the beginning of the tech earnings parade, with IBM (IBM), eBay (EBAY) and SanDisk (SNDK) all scheduled to report. The IT sector is expected to be the third strongest in the S&P 500 with earnings expectations of 12.2% and revenues of 7.5%.
How are we doing?
Expectations for S&P 500 earnings growth for the fourth quarter stand at 5.6%. Revenues are anticipated to come in with 1.3% growth.
Leaders
Earnings:
Health Care (22.1%). Notable industry: Biotechnology (60.2%)
Telecommunication Services (18.6%).
Information Technology (12.2%). Notable industry: Semiconductors (30.5%)
Revenues:
Health Care (7.9%). Notable industry: Biotech (37.3%).
