The S&P 500 companies are set to report their second-quarter earnings in a few weeks.
During the first quarter, S&P 500 quarterly earnings grew 14.0% from the year-ago period. This exceeded analysts’ 9.0% earnings growth forecast at the end of the quarter on March 31.
The first quarter earnings reporting season was strong.
So, how are expectations shaping for 2nd quarter earnings?
S&P 500 quarterly earnings: 2nd quarter outlook in aggregate
FactSet data show analysts expect S&P 500 company earnings to grow 6.5% in the second quarter. As in prior quarters, analysts have trimmed growth forecasts since the start of the second quarter.
They have cut earnings growth forecasts by 2.2% from 8.7% they expected on March 31.
This reduction in expected earnings is lower than the 4.3% average for the past five years.
S&P 500 quarterly earnings: 2nd quarter outlook for sectors and stocks
Analysts expect year-over-year growth in second quarter earnings in nine of the 11 sectors. Energy, information technology, and financial sectors are forecasted to lead the way.
Analysts expect earnings to shrink in consumer discretionary and utility sectors.
Analysts expect the energy sector’s earnings to grow an abnormally high 401.3%. This is due to the low profits recorded in the 2nd quarter of 2016.
Low oil prices limited aggregate profits in the energy sector to just $1.9 billion in the 2nd quarter of 2016. Energy company profits are forecasted to increase to $9.6 billion in this year’s second quarter.
Analysts expect sector heavyweights ExxonMobil (XOM), Chevron (CVX), and ConocoPhillips (COP) to record triple digit growth in second quarter earnings.
The information technology sector is expected to contribute to S&P 500 company earnings growth. Here, semiconductor companies are forecasted to increase their EPS at a rapid rate.
Micron Technology (MU) is forecasted to earn $1.50 a share, reversing last year’s loss of 8 cents a share. Analysts expect NVIDIA (NVDA) and Applied Materials (AMAT) to grow their second quarter EPS over 70% from the year-ago period.
Analysts have raised their earnings estimates in the financial sector after the Federal Reserve hiked benchmark interest rates in March and June this year. Insurers are forecasted to lead growth here. American International Group (AIG), Prudential Financial (PRU), and Allstate (ALL) are all expected to grow EPS by over 20%.
