S&P 500 Revenue Growth Has Accelerated Last 3 Years: Little-Told Story

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Includes: DMRL, EPS, IVV, PPLC, RSP, RVRS, RYARX, SDS, SFLA, SH, SPDN, SPLX, SPUU, SPXE, SPXL, SPXN, SPXS, SPXT, SPXV, SPY, SSO, UPRO, USMC, VFINX, VOO
by: Brian Gilmartin, CFA

Here is a quick history of the S&P 500's y/y revenue growth since early 2015:

  • Q3 '18: +7.3% (est)
  • Q2 '18: +10.0%
  • Q1 '18: +7.3%
  • Q4 '17: +8.0%
  • Q3 '17: +6.0%
  • Q2 '17: +5.3%
  • Q1 '17: +7.7%
  • Q4 '16: +5.0%
  • Q3 '16: +2.7%
  • Q2 '16: -0.2%
  • Q1 '16: -1.5%
  • Q4 '15: -4.1%
  • Q3 '15: -3.9%
  • Q2 '15: -3.4%
  • Q1 '15: -2.9%

(Source: FactSet's Earnings Insight)

Let's see how Q3 '18 S&P 500 revenue comes in - I would think a "greater than 10%" y/y growth print for the benchmark means good things for the quarterly return.

This is not a story that gets any coverage in the mainstream Financial media.

"Average" revenue growth by sector since Q1 '15:

  • Consumer Disc: +5.3%
  • Consumer Spls: +2.5%
  • Energy: -5.4%
  • Financials: +4%
  • Health Care: +7.2%
  • Industrials: +1.5%
  • Basic Mat: +3.4%
  • Technology: +5.4%
  • Utilities: -0.7%
  • Real Estate: +7.5% (data for just the last 5 quarters though)

Source: FactSet revenue growth (actual) from Q2 '18, back through Q1 '15)

Healthcare is top in terms of 14-quarter revenue growth, with Tech and Consumer Discretionary close behind. Both Energy and Industrials saw negative revenue growth from Q1 '15 through Q2 '16 and then both sectors saw positive y/y revenue growth as of the middle of 2016. Since Q2 '16, the Energy and Industrial sectors show sharply positive revenue growth.

Can this help us guide us in terms of future sector returns? Not always, but it's a helpful start.

Let's see where Q3 '18 revenue growth comes in relative to the expected 7%.

Thanks for reading.