Robust earnings season is going to end. Analysts were concern about the impact of higher dollar rate and slower global economic growth on companies in the S&P 500 with higher international revenue exposure before the beginning of earnings sessions. But the earnings growth in second-quarter beat the estimate and touched 24.8% which was the best since 2004. The stellar second-quarter earnings pushed the SP500 very close to its historical bull run.
According to Factset data, the earnings growth rate is 22.2% of companies that generate more than 50% of sales and 29.4% for the company that generate less than 50% of sales inside the U.S.
Till now 91% of SP500 companies have reported and 79% have beat the estimates which also touched Record-High Percentage of Companies Beating EPS Estimates since FactSet began tracking this metric in Q3 2008.
Earning above estimates:
Out of 11 sectors, the Telecommunication, Health Care, and Information Technology sectors have the highest percentages of companies reported earnings above estimates, while the Energy sector had the lowest percentage of companies reporting earnings above estimates.
Highest contributor to earnings and revenue growth:
Energy, Information technology and material sector are the highest contributors to earnings and revenue growth among the 11 sectors in this quarter. Meanwhile, the energy sector reported the largest downside difference between actual earnings and estimated earnings as Helmerich & Payne and Cabot Oil & Gas have reported the largest downside differences between actual EPS and estimated EPS.
U.S economy continues showing its strength and expand at a steady clip. Gross domestic product rate increased 4.1% which is the fastest pace in almost four years. The Federal Reserve kept interest rate unchanged and signalling to hike the interest rate in the coming months.
Looking forward to this strong growth in corporate earnings is likely to continue in the second half of the year and giving the market a crucial boost. Still, there are many more factors to be calculated into investment decisions so always stay updated with the market sentiment for better investment ideas.