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S&P 500 Q2 Sales and Earnings

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As a follow-up to my post from a couple of weeks ago I want to update you on Q2 2010 S&P 500 earnings season. As you can see in the chart below, the sales and income growth are consistent with what we saw in my earlier post.  Sales growth is a healthy 9.14% and earnings growth is a stellar 41.81%.  Companies are doing better than a year ago, but are still holding back on expenditures and hiring.  As we move into Q3 it will be harder to have such impressive growth unless we get some certainty in the economy.

Advance estimate for Q2 2010 GDP due out this Friday

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On Friday July 30th the 1st estimate for GDP for the second quarter will be released by the government.  Economists are estimating growth of 2.5% with a range of 1.00% to 4.00%.  This follows the first quarter growth of 2.7% and Q4 2009 GDP of 5.6%.  The economy continues to be sluggish overall and most of the data has been mixed.  Housing, jobs, and consumer confidence have weighed on the economy, but corporate profits and manufacturing have been positive.  We have left the abyss of 2008-9 behind us and the economy has stabilized.  Unfortunately the high growth  that usually occurs after a recession has not materialized yet.  I don’t think we are in store for a double dip recession, but it is very clear that there is a lot of pessimism both in the market and in the consumer.

In addition to the GDP numbers many other economic indicators are due out this week including:

  • CaseShiller Home Prices
  • Richmond Fed Manufacturing Index
  • Consumer Confidence
  • Durable Good Orders
  • Fed’s Beige Book

And if that isn’t enough for you… The commerce department will also be releasing their annual revision to growth figures over the last three years, which might cause even more volatility in the markets if revisions are negative. It should be an interesting week that will hopefully clear out some of the uncertainty in the market, whether good or bad.

Marcus Green

Summary of Q2 2010 S&P 500 earnings

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July 12th kicked off Q2 2010 earnings season and I wanted to share some brief information and statistics of the earnings reported so far. Earnings season can prove to be a very volatile time depending on how investors read the data. Many times the market will run-up during announcements and then fall back down to where it was once the hype is over. Investors need to be careful when looking at headline numbers on TV and to always put the numbers and stock price in perspective. Just like most economic data, earnings numbers are old and the market likes to look out 3-6 months. Many times it’s not even about the earnings, but what the CEO or CFO have to say about future quarters. Also, keep in mind that the earnings reported are quarterly, year over year comparisons. Remember how bad things were back in Q2 2009? Now that I have all that out let’s get to the statistics.

Only 15% of companies have reported earnings(75 of the 497) and a large amount of those have been Financials(28%), Information Technology(19%), and Consumer Discretionary(13%). These sectors were beat up last year and although the rebound is expected, it’s nice to see them recovering. Many sectors such as Health Care, Telecom, Consumer Staples, Energy, and Materials have not had many companies report yet, but I think the trend will be about the same.

Overall, we’re off to a great start with total sales growth of 9.41% and earnings growth of 58.83%. Earnings continue to be great as most companies have cut their workforce and slowed expenditures while they wait for more certainty in the economy. The sales growth rate has been getting a lot of attention in the news because it is not higher, but I don’t think 9.41% is that bad. Companies are showing signs of increased sales, but just not as much as some were hoping. As we continue to see earnings over the next few weeks I will update you on where they stand.

Marcus Green