Note Concerning Estimated S&P500 Earnings Growth

The FactSet Earnings Insight report of June 21, 2013 had various notable commentary with regard to projected earnings growth and profitability trends for the S&P500:

from page 3:

No Change in Earnings Growth Rate This Week, But Cut by Almost 3/4 since March 31

The estimated earnings growth rate for the second quarter is 1.1%, unchanged from last week. Small upward revisions to earnings estimates for companies in the Financials sector were offset by small downward revisions to earnings estimates for companies in the Materials sectors during the week.
Largest Cuts to Estimates to date: Materials, Information Technology, and Industrials Sectors 
Since the start of the second quarter (March 31), analysts have reduced earnings growth expectations for Q2 2013 by almost three-fourths (to 1.1% from 4.3%). Eight of the ten sectors have lower expected earnings growth rates today relative to the start of the quarter, led by the Materials, Information Technology, and Industrials sectors. All three of these sectors have also witnessed a high percentage of companies issue negative EPS guidance for the quarter.

from page 4:

Estimated Earnings Growth (1.1%), but Falls to -2.2% Excluding the Financials Sector

The estimated earnings growth rate for the index for Q2 2013 is 1.1%. If this is the final growth rate for the quarter, it will mark the third consecutive quarter of earnings growth for the index after reporting an earnings decline in Q3 2011. However, only five of the ten sectors are projected to report higher earnings relative to a year ago, led by the Financials and Telecom Services sectors. On the other hand, the Information Technology sector is expected to report the lowest earnings growth of all ten sectors for the second consecutive quarter.


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