Your S&P 500 Q2 Earnings Report Card

Analyzing the second-quarter reporting season, Wells Fargo said in a note last week that earnings and revenue beats have outpaced earnings and revenue misses.

The deduction came after 92 percent of the S&P 500 reported earnings, with the percentage going up to 94 percent if market cap was considered.

The analysis showed that the aggregate S&P 500 earnings per share surprise was 4.7 percent and the aggregate S&P 500 sales surprise was 0.9 percent.

The number of S&P 500 companies that reported EPS outperformance was 359, compared to 99 that missed expectations. Likewise, 313 S&P 500 companies beat sales estimates compared to 146 that trailed expectations.

See Also: Terms Of The Trade: Earnings Per Share

Underperforming Irrespective Of Beats/Misses

Wells Fargo noted that those companies which reported EPS beats underperformed the market (taking the S&P 500 Index as proxy) by 0.28 percent. Those reporting sales beats underperformed the market by a mere 0.07 percent.

However, companies reporting earnings misses underperformed the market by 1.78 percent compared to a 1.67 percent pullback by companies reporting sales misses.

Analyst Christopher Harvey said three days after the earnings release, companies reporting an EPS beat underperformed the market by 0.31 percent and those reporting sales beat underperformed by 0.09 percent.

Sector-Wise EPS Surprises

The biggest positive EPS surprise was posted by the IT sector, with the surprise percentage at 7.8 percent. Among the other outperformers were Healthcare (6.2 percent), Materials (4.6 percent), Consumer Discretionary (4.5 percent) and Telecom services (4 percent).

On the other hand, the energy sector posted a 2.9 percent negative surprise, with 18 S&P 500 companies belonging to the sector reporting positive surprises, while 14 reported negative surprises.

See Also: Terms Of The Trade: Market Cap

Benign Estimate Revisions

Wells Fargo noted that second-quarter S&P 500 EPS estimate has been revised down merely 0.6 percent in the quarter-to-date period and lowered by 4.5 percent in the quarter-to-date period.

Meanwhile, the 2017 annual S&P 500 EPS estimate has been upwardly revised by 0.4 percent in the quarter-to-date period but trimmed by 0.4 percent in the year-to-date period.

The energy sector had the largest downward revision to its annual EPS estimate for the quarter-to-date period, down 12.7 percent. For the year-to-date period, the revision was a steeper 17.5 percent.