Second-quarter earnings season is coming to a close, with more than 95 percent of Standard & Poor’s 500 index companies already reporting. Wells Fargo analyst Christopher Harvey has compiled earnings and market reaction data for the entire S&P 500 up to this point. The results reveal a mostly positive quarter for companies and a mostly negative market reaction.
According to Wells Fargo’s analysis, the number of S&P 500 companies that have topped consensus earnings-per-share estimates in Q2 outnumber those that have missed EPS estimates by more than three to one. Overall, the average S&P 500 company has reported a 4.7 percent EPS beat and a 0.9 percent revenue beat.
[See: 10 Ways for Investors to Buy the Market.]
Unfortunately for investors, even the companies topping analyst expectations are getting little love from the market. Wells Fargo reports that the stocks that have beaten earnings estimates have lagged the market by an average of 0.28 percent following their report dates. Stocks that topped revenue estimates have underperformed by 0.07 percent.
Predictably, stocks that missed earnings and revenue estimates have fared even worse, underperforming by an average of 1.78 percent and 1.67 percent, respectively.
The technology sector continued its market-leading ways in Q2, topping all other sectors with an average earnings beat of 7.8 percent. The energy sector has delivered the most disappointing quarter, with energy stocks reporting an average earnings miss of 2.9 percent. The energy sector was the only sector in the market to report average earnings that fell below consensus estimates.
Looking ahead to the second half of the year, Wells Fargo reports that full-year earnings estimates for the S&P 500 have risen an average of 0.4 percent since earnings season began. Despite the recent uptick, full-year earnings estimates are still down 0.4 percent since the beginning of the year.
Not surprisingly, the full-year earnings estimate for the energy sector has fallen 12.7 percent since the end of 2016, the largest decline of any sector. Full-year tech sector earnings revisions are up 2.9 percent, tops among all market sectors.
[See: The 10 Best Ways to Buy Tech Stocks.]
Year-to-date, the Energy Select Sector SPDR ( XLE) exchange-traded fund is down 17.3 percent, while the Technology Select Sector SPDR ( XLK) ETF is up 18 percent.
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Investors Shrug Off Mostly Positive Earnings Season originally appeared on usnews.com
