Below we provide some key takeaways on Q1 corporate earnings internals as reporting season winds down. Nearly 90% of S&P 500 companies have reported. From our mid-season update (Comping Difficult Comps) we would make the incremental point that growth rates remained resilient throughout the second half of reporting season.
Here are some high-level call-outs with corresponding charts below:
- Broad-Based Strength: 443 / 500 S&P 500 companies have reported for Q1 and sales and earnings growth is +8.2% YY & +23.8% YY, respectively. For context on how growth rates have held in, sales and earnings growth rates were tracking +9.4% & +25.1% YY at the halfway point in our last update. For the second consecutive quarter, every sector has reported growth on both the top & bottom line.
- Sales Growth: Sales growth for the S&P 500 index in aggregate is tracking +8.2% YY. If this pace were to continue, Q1 of 2018 would be the fastest pace of top-line growth since Q3 of 2011. Like earnings, this will mark the 7th consecutive quarter of sales growth and peak second derivative acceleration.
- Information Technology: The sector faced its first difficult comp this quarter. Going into reporting season, consensus Bloomberg estimates for the sector were for +20.6% YY earnings growth on top of 21.7% YY earnings growth in Q1 of 2017. Information Tech companies handily beat estimates. 53 of 68 companies have reported YY earnings growth of +29.0%.
- Beat Rates: In aggregate, S&P constituents have beaten earnings estimates by 7.3% this quarter. To put this in perspective, the 7.3% beat rate is the widest margin for a quarter since Q3 of 2010 on the back of Great Recession comps.
