Changes In Q3 '21 Expected Revenue Growth Rates For S&P 500

Summary

• Taking a look at how the expected Q3 ’21 sector revenue growth rates have changed since mid-August ’21 or the unofficial end of Q2 ’21 earnings season.
• Per Bespoke’s research, the S&P 500 has now reached “extremely oversold” levels, worse than the oversold extreme seen in late October 2020.
• So far - since mid-August - anyway, the lack of revenue revisions could bode well for Q3 ’21 earnings.

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There are 11 sectors in the S&P 500.

Readers need to see how the expected Q3 ’21 sector revenue growth rates have changed since mid-August ’21 or the unofficial end of Q2 ’21 earnings season:

• Consumer Discretionary: On 10/1, 10.6% y.y revenue growth is expected, versus 10.4% on 8/13/21;
• Consumer Staples: On 10/1, 8.3% y.y revenue growth is expected, 10.4% on 8/13/21;
• Energy: on 10/1, 57.8% y.y revenue growth is expected, vs. 57.9% on 8/13/21;
• Financial: on 10/1, -0.8% y.y revenue growth is expected vs. -1.7% on 8/13/21;
• Health Care: on 10/1, 11.1% y.y revenue growth is expected vs. 10.7% on 8/13/21;
• Industrials: on 10/1, 17.8% y.y revenue growth is expected vs. 19.2% on 8/13/21;
• Basic Materials: on 10/1, 28.4% y.y revenue growth expected vs. 28.7% on 8/13/21;
• Real Estate: on 10/1, 13.1% y.y revenue growth expected, vs. 12.8% on 8/13/21;
• Technology: on 10/1, 18.7% y.y revenue growth expected, 18.1% on 8/13/21;
• Communication Services: on 10/1, 17.3% y.y revenue growth expected, vs. 17.5% on 8/13/21;
• Utilities: on 10/1, 5.2% y.y revenue growth expected, vs. 6.7% on 8/13/21;
• S&P 500: on 10/1, 14.1% y/y revenue growth expected, vs. 13.9% as of 8/13/21;

Sectors ranked from strongest to weakest expected Q3 ’21 revenue growth:

• Energy: 57.8%
• Basic Materials: 28.4%
• Technology: 18.7%
• Industrials: 17.8%
• Communication Services: 17.3%
• Real Estate: 13.1%
• Health Care: 11.1%
• Consumer Discretionary: 10.6%
• Consumer Staples: 10.6%
• Utilities: 5.2%
• Financials: -0.8%
• S&P 500: 14.1%

Sectors with the biggest upward revisions since August 13 ’21 for Q3 ’21 revenue:

• Technology saw a 60 bps increase on an expected 18.7% growth rate;
• Health Care saw a 40 bps increase on an expected 11.1% growth rate;

Sectors with the biggest downward revisions since August ’13 ’21 for Q3 ’21 revenue:

• Consumer Staples saw a 210 bps decrease since 8/13/21, probably due to the stronger dollar.
• Industrials saw a 140 bps decrease since 8/13/21.
• Utilities saw a 150 bps decrease on a mid-single digit growth rate.

Commentary

Tesla’s (TSLA) announcement over the weekend of stronger-than-expected Q3 ’21 car deliveries will likely help the Consumer Discretionary sector next week in terms of possible revisions, although Tesla’s earnings weight is much smaller than its market cap weight in the S&P 500.

The dollar’s influence is bigger than readers might suspect on the S&P 500, since 40-45% of the entire benchmark’s revenue is non-US.

Summary / conclusion

Per Bespoke’s research today, the S&P 500 has now reached “extremely oversold” levels, worse than the oversold extreme seen in late October 2020.

While today might not have been the exact bottom, you’d have to think “extremely oversold” is within a 9-iron of a longer-term tradeable bounce.

So far - since mid-August - anyway, the lack of revenue revisions could bode well for Q3 ’21 earnings.

Financials will report first next week as they always do: JPMorgan (JPM), Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC) all report next Wednesday and Thursday of next week. Morgan Stanley (MS) and Schwab (SCHW) are in there too, although I don’t see Goldman (GS) on Briefing.com’s list of next week’s reports.

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Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.