Q2 Earnings Growth Beats Expectations

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 |  Includes: IVV, IYC, IYE, IYF, IYH, IYJ, IYK, IYM, IYW, IYZ, SPY, VPU, XLB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY
by: Bespoke Investment Group

Below is a chart of actual versus estimated year-over-year earnings growth in the second quarter of 2010. The estimates are from early July just before earnings season started. As shown, earnings for the entire S&P 500 grew just under 50% in Q2 versus Q2 2009. This is 15 percentage points higher than the estimate of 34% just before reports started getting released.

The Financial sector had the biggest growth at 119.2%, which was also the widest gap versus expectations. Analysts were looking for growth of 80.8%. Materials had the second highest growth at 104.5%, followed by Energy at 99.5%. Consumer Discretionary had the second best reading versus expectations with a difference of +32.2%. Telecom, Consumer Staples, and Health Care all had growth of less than 10%, but they all came in better than expected. In fact, every sector came in stronger than expected.

The Technology sector saw strong growth at 53.6%, but it was also closest to what analysts expected, meaning the earnings numbers for this sector didn't surprise people to the upside at all.

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