Corporate Earnings Outlook for Q3

This week we will see the biggest number of companies release their earnings results. For Q3, 82 companies of the S&P 500 reported their results - 59% beat estimates, 27% missed estimates and 14% were in line with expectations. Reports coming from the technology sector were surprisingly good, i.e. Google (GOOG) or IBM (IBM).

As you can see, the earnings forecast for Q2 were significantly overestimated. Expected change was -9.9%, while the actual change was -29%. The Q3 earnings estimates remain very high, and definitely will be adjusted in the coming days. Last quarter only Technology, Industrials and Materials had slightly beaten estimates. Q3 earnings outlook for Energy, Financials or Consumer Discretionary are unrealistic. Let's have a look at expected earnings growth (based on S&P for Q3) for sectors Y-O-Y.

Quarterly Breakdown	2007	2008	% EPS
	Q3A	Q3E	growth
S&P 500	20.9	20.1	-3.8
S&P 500 Consumer Discretion.	2.6	2.2	-15.4
S&P 500 Consumer Staples	4.1	4.3	4.9
S&P 500 Energy	11.0	15.5	40.9
S&P 500 Financials	5.9	1.9	-67.8
S&P 500 Health Care	6.0	6.5	8.3
S&P 500 Industrials	5.4	5.4	0
S&P 500 Information Tech.	4.3	4.6	7
S&P 500 Materials	3.9	3.9	0
S&P 500 Telecommun.	2.2	2.6	18.2
S&P 500 Utilities	4.2	4.2	0