Second Quarter Earnings Season: Consumer Discretionary Sector Holds Up Despite Recession Concerns

As we are in the heart of the earnings season, 56% of companies in the S&P 500 have reported second quarter earnings, according to FactSet.

Companies are so far reporting earnings that are 3.1%  above estimates, which is below the five-year average of 8.8% above estimates.

Among S&P 500 companies, 75.7% have reported surprises in earnings, while 73% of the remaining companies in the New York Stock Exchange beat earnings, and roughly 65% of companies in the NASDAQ beat earnings.

Meanwhile, 87% of companies in the consumer discretionary sector have been above earnings estimates so far in Q2, while 13% were below estimates. Companies are so far reporting earnings 19% above estimates in Q2, if that remains the case it will be the fourth-largest earnings surprise percentage since 2008, per a FactSet report.

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What Happened: In spite of high inflation and supply chain disruptions, companies in the consumer discretionary sector are still reporting strong earnings with weaker consumer sentiment.

Out of the 290 consumer discretionary stocks and counting, 69% have beat earnings, while roughly 30% have missed earnings and about 1% are inline with the consensus estimates.

As of now, the sub sectors performing best by earnings in the consumer discretionary sector include automotive aftermarket, business services, diversified commercial services, consumer electronics and appliances, engineering and construction, farming, electronic mail service, homebuilding, metal fabrications, motor vehicles, office equipment and services, textiles, recreational games and telecommunications equipment.

According to Benzinga Pro, the Ford Motor Company F beat earnings by roughly 51% as revenue was up $13.78 billion dollars year-over-year, posting earnings per share of $0.68 versus consensus estimates of $0.45 per share.

The worst performing sub sectors by earnings include original equipment manufacturers, aerospace, auto and home supply stores, broadcasting, department and specialty retail, industrial machinery components, specialty chemicals and tobacco.

DuPont de Nemours DD reportedly missed earnings by nearly 22% as revenue was down $813 million dollars year-over-year, posting earnings per share of $0.88 versus estimates of $1.13 per share.