The first two weeks of earnings season are in the books so it's time to take our first look at which sectors are doing well and which ones are - uh - "underperforming".
The chart below breaks down each sector's earnings reports into five different categories and gives total stocks that have reported thus far.
|Sector||Earnings Beats||Y-o-Y Earnings Increases||Y-o-Y Revenue Increases||Upside Guidance||Total Providing Guidance||Total Number of Stocks Reporting|
Before getting into individual sectors, let's start by looking at some of the totals and calculating the percentages.
Earnings beats: 71%
Year-over-year earnings increases: 71.5%
Year-over-year revenue increases: 72.5%
Upside guidance out of those providing guidance: 26%
Upside Guidance out of total stocks reporting: 10%
Based on earnings and revenues, this earnings season has so far been pretty darn good. The doubt begins to creep in when we look at the guidance numbers. Company management seems to be rather reluctant to go out on a limb and declare that the upcoming quarter will result in the kind of growth we are seeing in Q2 results.
Sector results --
Just so we don't end on a downer, let's identify the worst performing sector first. That honor goes to the financial sector. Earnings beats and y-o-y earnings increases are roughly 57%. Revenue increases were less than 28%. There was no upside guidance whatsoever.
Also in the lower range of results, we have energy and some of the consumer sectors where upside guidance is very light or nonexistent.
At the high end of results, there are the transportation and technology sectors. Earnings beats, y-o-y earnings increases and revenue increases are roughly 75% for tech and upside guidance is plentiful. Transports are doing even better with earnings beats, Y-o-y earnings increases and revenue increases over 85%. Unfortunately, very few transportation companies offered guidance - only three companies went on the record with guidance but at least two of them were positive.
With technology and transportation leading the way and solid performance from basic industries and capital goods, it's hard to believe we are headed for a double-dip. Earnings beats are all well and good but revenue increases and upside guidance would argue for continued future improvement though it is clear that some sectors will lag for a while.