Key Points:
- 4Q earnings season off to good start, but it’s still very early. Median surprise of 6.07% and surprise ratio of 2.50 for EPS, 0.625% and 2.29 for revenues.
- Strong earnings season for third quarter — a median EPS surprise of 5.00%, and a 3.78 surprise ratio. While those numbers are down from earlier in the reporting season, they are still very good. Total of 359 positive surprises and just 95 disappointments. Positive year-over-year growth for 379, falling EPS for 117 firms, 3.24 ratio. 71.8% of all reporting firms do better than expected, 75.8% report positive year over year growth. Total net income reported up 25.3%.
- Third quarter Sales Surprise ratio at 1.50, median surprise 0.79%; 56.6% of all firms do better than expected on top line. Revenue growth healthy at 8.12%.
- Reported fourth quarter earnings growth of 25.4%, expected year-over-year growth of 19.8% for the vast majority of firms yet to report. On the Revenue side, 10.1% reported, but just 3.0% expected for those yet to report.
- Net margins expected to expand to 8.85% (among yet to report) from 7.38% a year ago, but down from 9.11% in third quarter. Excluding Financials margins expected to rise to 8.20% from 7.97% a year ago, but down from 8.80% in the third quarter.
- Full-year total earnings for the S&P 500 expected to jump 42.9% in 2010, 15.1% further in 2011. Growth to continue in 2012 with total net income expected to rise 12.0%
- Total revenues for the S&P 500 expected to rise 4.03% in 2010, 5.38% in 2011 and 5.58% in 2012. Excluding financials, revenues expected to be up 8.18% in 2010, 5.88% in 2011 and 5.54% in 2012.
- Twelve sectors expected to post double-digit earnings growth in 2011, 11 double-digit growers in 2012. Cyclical Construction, Industrial and Materials sectors all expected to post growth of over 30% in 2011.
- Net Margins marching higher, from 5.88% in 2008 to 6.39% in 2009 to 8.72% expected for 2010, 9.18% expected for 2011 and 10.19% in 2012. A major source of earnings growth. Net margins ex-financials 7.79% in 2008, 7.11% in 2009, 8.25% expected for 2010, 8.83% in 2011, and 9.31% in 2012.
- Revisions ratio for full S&P 500 at 1.71 for 2011, at 1.58 for 2012, both bullish readings. Ratio of firms with rising to falling mean estimates at 1.62 for 2011, 1.61 for 2012, also positive readings. Total revisions activity near seasonal lows and will expand dramatically over the next few weeks. Current sample size is very thin.
- S&P500 earned $544.3 billion in 2009, expected to earn $778.5 billion in 2010, $896.4 billion in 2011. Major milestone expected for 2012 as the total earnings for the S&P 500 are expected to top the $1 Trillion mark of the first time at 1.003 Trillion.
- S&P 500 earned $57.64 in 2009: $82.18 in 2010 and $95.06 in 2011 expected bottom up. For 2012, $106.15 expected in first read. Puts P/E’s at 15.5x for 2010, and 13.4x for 2011 and 12.0x for 2012.
With the strong third quarter earnings season now well behind us, the focus turns to the fourth quarter season which kicks off this week when Alcoa (AA), Intel (INTC) and J.P. Morgan (JPM) report. We have already had a handful (24) of S&P 500 firms report, but they were mostly firms with November fiscal period ends, with a high proportion of retailers in the mix.
While far from a representative sample, the early reports are encouraging, with total net income for those firms rising 25.4% over a year ago. The early median surprise of 6.07% is also quite strong, although the ratio of positive to negative surprises is a bit weaker than normal at just 2.50%. However, those numbers are always extremely volatile in the early going and it is far too early to draw any real conclusions about the quarter.
Positive Expectations
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Most of the focus should be on the expectations for those who have yet to report. There the expectations are also positive, particularly on the earnings front. Total net income is expected to rise 19.8% over year-ago levels. While that is a slowdown from the year-over-year growth of the third quarter (25.1%), it is well above the growth that was expected for the third quarter just before the third quarter reporting season really got underway (15.5%).
Given that positive earnings surprises almost always outnumber disappointments, one does not need an overly active imagination to envision that growth will be close to 25% again when all is said and done for the quarter. Revenue growth, though, is expected to slow down significantly to an actual slight decline of 0.09% from positive growth of 8.01% in the third quarter. On the other hand, revenue growth among the handful that have reported is very healthy at 10.1%.
The financials are a big part of the overall revenue growth slowdown, but not the entire story. Excluding them, revenue growth is expected to slow to 3.02% year over year from 9.12%. Tougher year-over-year comparisons are a bigger part of the story.
Net Margin Expansion
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Thus, the stellar earnings growth is mostly due to the continued expansion of net margins. Much of the year-over-year margin expansion is due to the financials, were the whole concept of revenues is a bit different from most companies, and thus the concept of net margins is also a bit different.
However, even if the financials are excluded, net margins continue to march northward, at least year over year. For the S&P 500 as a whole, net margins are expected to be 8.85% in the fourth quarter, up from “just†7.38% a year ago, but down from 9.11% in the third quarter. If the financials are excluded, margins are expected to rise to 8.20% from 7.97% a year ago but down from 8.80% a year ago. Those numbers are for the vast majority that have yet to report.
The reported net margins among the 24 early birds are 3.56%, up from 3.14% a year ago but down from 3.76% in the third quarter. Fully one third of all the companies that have reported are retailers, however, and retailers tend to have low margins.
Forecasts for 2010 & 2011
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The expectations for the full year are very healthy, with total net income for 2010 expected to rise to $778.5 billion in 2010, up from $544.3 billion in 2009. In 2011, the total net income for the S&P 500 should be $896.4 billion, or increases of 42.9% and 15.1%, respectively.
If the early expectations for 2012 prove to be correct, that year will mark two significant milestones. Total net income is expected to reach $1.0036 Trillion, marching passed the $1 Trillion level for the first time ever. That will also put the “EPS†for the S&P 500 over the $100 “per share†level for the first time at $106.15. That is up from $57.64 for 2009, $82.18 for 2010, and $95.06 for 2011.
In an environment where the 10-year T-note is yielding just 3.32%, a P/E of 15.5x based on 2010 and 13.4x based on 2011 earnings looks attractive. Much of the $600 billion in newly created money from QE2 is likely to eventually find its way into the equity market (not directly, but eventually).
Historically, the year after mid-term elections has almost always been a good one for the stock market. The extension of unemployment benefits and the one-year cut in the payroll tax should be stimulative to the economy (the extension of the high-end tax cuts is only slightly stimulative relative to letting them expire, and certainly does not provide any fresh stimulus to the economy). A stronger economy should allow earnings to continue to rise.
A Few Caveats
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On the other hand, there is a very real prospect of total political gridlock, which would greatly raise uncertainty about governmental policy and the strength of the economy that could undermine confidence. As Shakespeare said: “Beware the ides of March.†That is approximately when the U.S. will hit its current debt ceiling. If it is not raised, the U.S. Government would go into at least a technical default on its debt, and the government would probably have to shut down.
That is hardly something that will inspire confidence in the markets. While it is inconceivable that it will not eventually be passed, it is an opportunity for major political theater, and there is a chance that there will be a delay between the debt ceiling being hit and when it gets raised.
The economy does seem to have made a slow turn towards recovery. However, job creation remains very sluggish. Most of the real growth in the economy has come from higher productivity, not more hours being worked. Those productivity gains are accruing to capital, not labor, and are a major reason behind the strong earnings growth.
Earnings Growth to Power Forward
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Still, companies are expected to continue growing their earnings nicely, and the 15.1% expected growth for 2011, if achieved, means that the total earnings for the S&P 500 should hit a new record by the middle of next year. The fact that analysts are, on balance, still raising estimates for 2011, increases the odds that that growth will be achieved. Growth of 15.1% is not exactly awful.
Even on the revenue side the expected growth in 2011 of 5.38%, or 5.88% if one excludes the financial sector, is still pretty solid. Clearly the analytical community is not expecting the economy to turn south again.
Scorecard & Earnings Surprise
- Only 24 firms (4.8%) have reported, and most of those have November fiscal period ends.
- Off to a good start with a median surprise of 6.07%, and a 2.50 surprise ratio (15 beats, 6 misses), 62.3% of all firms beat expectations.
- Positive year-over-year growth for 19, falling EPS for 5 firms, 3.80 ratio, 79.2% of all firms reporting have higher EPS than last year.
- Total net income up 25.43% among those that have reported.
- Seven sectors have yet to have any firms report — five more have only a single report in.
Historically, a “normal earnings season†will have a surprise ratio of about 3:1 and a median surprise of about 3.0%. Thus in the early going we are doing much better than average on the median front, and about average on the ratio front. Early on the ratios and medians can be very volatile, but it looks like an OK start to things. Pay attention to the percent reporting in evaluating the significance of the sector numbers.
|
Scorecard & Earnings Surprise 4Q Reported
|
|||||||
|---|---|---|---|---|---|---|---|
| Income Surprises | Yr/Yr Growth |
% Reported |
Surprise Median |
EPS Surp Pos |
EPS Surp Neg |
# Grow Pos |
# Grow Neg |
| Basica Materials | 176.92% | 4.35% | 100.00 | 1 | 0 | 1 | 0 |
| Finance | 306.98% | 1.28% | 52.38 | 1 | 0 | 1 | 0 |
| Computer and Tech | 39.90% | 8.57% | 8.45 | 4 | 1 | 6 | 0 |
| Industrial Products | -6.67% | 5.00% | 8.11 | 1 | 0 | 0 | 1 |
| Consumer Discretionary | 24.12% | 6.06% | 6.25 | 1 | 1 | 2 | 0 |
| Business Service | 6.35% | 5.26% | 5.71 | 1 | 0 | 1 | 0 |
| Retail/Wholesale | 15.00% | 17.78% | 4.39 | 5 | 2 | 7 | 1 |
| Consumer Staples | -2.98% | 7.89% | 0.00 | 1 | 1 | 1 | 2 |
| Transportation | -17.97% | 11.11% | -11.45 | 0 | 1 | 0 | 1 |
| Medical | na | 0.00% | na | Na | Na | na | Na |
| Auto | na | 0.00% | na | Na | Na | na | Na |
| Construction | na | 0.00% | na | Na | Na | na | Na |
| Conglomerates | na | 0.00% | na | Na | Na | na | Na |
| Aerospace | na | 0.00% | na | Na | Na | na | Na |
| Oils and Energy | na | 0.00% | na | Na | Na | na | Na |
| Utilities | na | 0.00% | na | Na | Na | na | Na |
| S&P | 25.43 | 4.80% | 6.07 | 15 | 6 | 19 | 5 |
Sales Surprises
- Sales Surprise ratio at 2.29, median surprise 0.652%, 66.6% of all firms do better than expected on top line.
- Growing Revenues outnumber falling revenues by ratio of 3.80, 79.2% of firms have higher revenues than a year ago.
- Revenue growth very healthy at 10.1% but still greatly lags earnings growth pointing to net margin expansion (see net margin tables below). It’s still very early in January, so take numbers with a bag of rock salt.
|
Sales Surprises
|
|||||||
|---|---|---|---|---|---|---|---|
| Sales Surprises | Yr/Yr Growth |
% Reported |
Surprise Median |
Sales Surp Pos |
Sales Surp Neg |
# Grow Pos |
# Grow Neg |
| Basic Materials | 7.84% | 4.35% | 2.858 | 1 | 0 | 1 | 0 |
| Computer and Tech | 38.12% | 8.57% | 2.498 | 4 | 2 | 6 | 0 |
| Consumer Discretionary | 9.55% | 6.06% | 2.476 | 2 | 0 | 2 | 0 |
| Industrial Products | 5.88% | 5.00% | 2.27 | 1 | 0 | 1 | 0 |
| Retail/Wholesale | 7.09% | 17.78% | 1.669 | 6 | 2 | 7 | 1 |
| Business Service | 3.02% | 5.26% | 0.277 | 1 | 0 | 1 | 0 |
| Finance | -23.31% | 1.28% | 0 | 0 | 0 | 0 | 1 |
| Consumer Staples | -0.55% | 7.89% | -1.085 | 1 | 2 | 0 | 3 |
| Transportation | 12.05% | 11.11% | -1.349 | 0 | 1 | 1 | 0 |
| Medical | na | na | Na | Na | Na | na | Na |
| Auto | na | na | Na | Na | Na | na | Na |
| Construction | na | na | Na | Na | Na | na | Na |
| Conglomerates | na | na | Na | Na | Na | na | Na |
| Aerospace | na | na | Na | Na | Na | na | Na |
| Oils and Energy | na | na | Na | Na | Na | na | Na |
| Utilities | na | na | na | Na | Na | na | Na |
| S&P | 10.10% | 4.80% | 0.652 | 16 | 7 | 19 | 5 |
Reported Quarterly Growth: Total Net Income
- The total net income is 25.43% above what was reported in the fourth quarter of 2009, down from 30.09% growth these same 24 firms reported in the third quarter quarter. Sequential earnings growth is -8.80%.
- The expected growth table is probably of more interest at this point.
|
Quarterly Growth: Total Net Income Reported
|
|||||
|---|---|---|---|---|---|
| Income Growth | “Sequential Q1/Q4 E” |
“Sequential Q4/Q3 A” |
Year over Year 4Q 10 A | Year over Year 1Q 11 E | Year over Year 3Q 10 A |
| Finance | -27.80% | 35.66% | 306.98% | 307.12% | -11.03% |
| Basic Materials | 9522.87% | 120.00% | 176.92% | 2.15% | 516.67% |
| Computer and Tech | -11.62% | 16.84% | 39.90% | 15.45% | 73.05% |
| Consumer Discretionary | -8.65% | -62.62% | 24.12% | -4.02% | 18.92% |
| Retail/Wholesale | 48.09% | -10.52% | 15.00% | 4.33% | 19.70% |
| Business Service | -6.34% | 1.52% | 6.35% | 2.03% | 6.45% |
| Consumer Staples | -27.37% | 22.79% | -2.98% | 3.27% | -4.57% |
| Industrial Products | -6.85% | -8.20% | -6.67% | 6.45% | -7.58% |
| Transportation | 21.63% | -25.53% | -17.97% | 44.02% | 109.94% |
| Medical | na | na | na | Na | Na |
| Auto | na | na | na | Na | Na |
| Construction | na | na | na | Na | Na |
| Conglomerates | na | na | na | Na | Na |
| Aerospace | na | na | na | Na | Na |
| Oils and Energy | na | na | na | Na | Na |
| Utilities | na | na | na | Na | Na |
| S&P | 14.40% | -8.80% | 25.43% | 13.34% | 30.09% |
Expected Quarterly Growth: Total Net Income
- Total net income for the S&P 500 in the third quarter of 2010 (among those yet to report) is expected to rise 19.8% over fourth quarter of 2009 levels.
- Slowdown from the 25.1% growth those same firms had in the third quarter. A severe slowdown to 7.6% growth expected in the first quarter due to much more difficult comparisons.
- Finance expected to post largest gains by a large margin. Five other sectors expected to post double-digit gains, with Industrials, Transportation and Energy expecting gains of over 25%.
- Three sectors: Retail, Aerospace and Conglomerates expected to post lower total income than a year ago.
- Earnings are expected to be down 4.0% from what these same firms reported in the third quarter.
- At this point in the third quarter season, the expectations were for just 15.48% growth, so actual results could be much stronger. I would pencil in year-over-year earnings growth of closer to 25% by the time all is said and done.
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Quarterly Growth: Total Net Income Expected
|
|||||
|---|---|---|---|---|---|
| Income Growth | “Sequential Q1/Q4 E” |
“Sequential Q4/Q3 E” |
Year over Year 4Q 10 E | Year over Year 1Q 11 E | Year over Year 3Q 10 A |
| Finance | -0.58% | 0.77% | 187.43% | -5.85% | 28.72% |
| Industrial Products | 11.93% | -15.52% | 44.51% | 41.70% | 53.07% |
| Transportation | -12.72% | -3.59% | 33.08% | 28.25% | 60.83% |
| Oils and Energy | 5.77% | 4.47% | 28.29% | 14.11% | 36.66% |
| Basic Materials | 37.87% | -7.94% | 19.97% | 33.48% | 44.11% |
| Auto | 8.18% | -8.20% | 13.64% | 8.55% | 90.75% |
| Construction | -3.90% | -27.28% | 9.59% | 4.60% | 1148.57% |
| Computer and Tech | -11.95% | 3.15% | 8.88% | 8.94% | 43.85% |
| Business Service | 5.34% | 3.77% | 8.31% | 19.85% | 15.95% |
| Consumer Staples | -2.59% | -9.74% | 2.92% | 4.92% | 5.83% |
| Medical | 10.47% | -8.65% | 2.17% | 1.09% | 10.96% |
| Consumer Discretionary | -7.68% | 1.20% | 2.06% | 0.80% | 16.06% |
| Utilities | 25.50% | -29.47% | 0.76% | 0.47% | 6.37% |
| Conglomerates | 2.22% | -11.45% | -6.68% | 18.59% | 6.20% |
| Aerospace | -5.80% | -0.56% | -11.53% | 8.13% | 144.50% |
| Retail/Wholesale | 25.99% | 2.52% | -19.26% | 31.56% | 8.72% |
| S&P | 3.43% | -3.98% | 19.83% | 7.55% | 25.07% |
Quarterly Growth: Total Revenues Reported
- Early Revenue growth very strong at 10.1%, but that is down from the 11.2% growth the same firms posted in the third quarter.
- Sequentially revenues 3.1% lower than in the third quarter.
- Still a very thin sample, especially at the individual sector level.
|
Quarterly Growth: Total Revenues Reported
|
|||||
|---|---|---|---|---|---|
| Sales Growth | “Sequential Q1/Q4 E” |
“Sequential Q4/Q3 A” |
Year over Year 4Q 10 A | Year over Year 4Q 10 E |
Year over Year 3Q 09 A |
| Computer and Tech | 10.77% | 6.93% | 38.12% | 26.60% | 49.52% |
| Transportation | 6.14% | 1.85% | 12.05% | 10.87% | 18.08% |
| Consumer Discretionary | 7.60% | -13.14% | 9.55% | 8.19% | 7.43% |
| Basic Materials | 84.10% | -6.30% | 7.84% | 4.06% | 3.94% |
| Retail/Wholesale | 1.32% | -7.49% | 7.09% | 5.67% | 7.05% |
| Industrial Products | 1.39% | 1.41% | 5.88% | 5.10% | 3.59% |
| Business Service | 0.98% | -1.16% | 3.02% | 3.74% | 3.60% |
| Consumer Staples | -6.37% | 13.58% | -0.55% | 1.75% | -1.94% |
| Finance | -48.60% | 28.24% | -23.31% | -42.11% | -16.69% |
| Medical | na | na | na | na | na |
| Auto | na | na | na | na | na |
| Construction | na | na | na | na | na |
| Conglomerates | na | na | na | na | na |
| Aerospace | na | na | na | na | na |
| Oils and Energy | na | na | na | na | na |
| Utilities | na | na | na | na | na |
| S&P | 6.96% | -3.13% | 10.10% | 7.70% | 11.21% |
Quarterly Growth: Total Revenues Expected
- Total revenue for the remaining S&P 500 firms expected be essentially flat in the fourth quarter relative to a year ago. That marks a very significant slowdown from the 8.0% growth posted by these firms in the third quarter.
- Five sectors expected to post lower revenues than a year ago, eleven higher. Revenue for the financials is the principal source of the revenue slowdown. Low interest rates depress interest income, which is a major part of financials revenue, but also reduce interest expense. As a result, revenues at financials are notoriously flakey.
- Excluding financials, total revenues expected to grow 3.02%, down from 9.12% in the third quarter.
- Three sectors expected to post double-digit revenue growth in the third quarter. All of which also posted double-digit growth in the second quarter and are expected be among the leaders again in the first quarter.
|
Quarterly Growth: Total Revenues Expected
|
|||||
|---|---|---|---|---|---|
| Sales Growth | “Sequential Q1/Q4 E” |
Sequential Q4/Q3 E | Year over Year 4Q 10 E |
Year over Year 1Q 11 E |
Year over Year 3Q 10 A |
| Industrial Products | -3.09% | 1.23% | 20.77% | 11.75% | 23.60% |
| Transportation | -3.48% | 0.00% | 12.33% | 9.29% | 16.29% |
| Computer and Tech | -6.79% | -0.22% | 10.08% | 7.86% | 18.37% |
| Basic Materials | 4.85% | 0.00% | 9.46% | 10.39% | 17.80% |
| Oils and Energy | 3.28% | 0.00% | 7.74% | 9.07% | 16.11% |
| Utilities | 0.59% | 0.00% | 7.39% | 1.06% | 5.59% |
| Business Service | -3.29% | 0.63% | 5.92% | 6.49% | 7.34% |
| Consumer Discretionary | -9.85% | -0.78% | 3.76% | 2.27% | 2.49% |
| Medical | -0.10% | -0.03% | 2.40% | 3.19% | 8.56% |
| Conglomerates | -10.48% | 0.00% | 1.37% | 0.15% | -0.11% |
| Aerospace | -7.59% | 0.00% | 1.23% | 3.57% | 2.36% |
| Consumer Staples | -7.33% | 0.16% | -3.92% | -4.35% | 3.99% |
| Construction | -4.13% | 0.00% | -3.95% | 3.91% | 3.06% |
| Retail/Wholesale | 8.28% | -9.84% | -6.32% | 12.51% | 3.16% |
| Auto | 0.24% | 0.00% | -6.86% | 2.20% | 5.02% |
| Finance | 0.16% | 0.00% | -18.40% | -22.33% | 1.93% |
| S&P 500 | -0.44% | -1.54% | -0.09% | 1.57% | 8.01% |
| Excl Financials | -0.52% | 1.99% | 3.02% | 5.98% | 9.12% |
Quarterly Net Margins Reported
- Sector and S&P net margins are calculated as total net income for the sector divided by total revenues for the sector.
- Net margins for S&P 500 expand to 3.56% from 3.14% a year ago, but down from 3.76% in the third quarter. Net margins ex-financials rise to 3.39% from 3.10% a year ago.
- Low Margin Retail firms over represented in early sample, margins will rise as more firms report.
|
Quarterly: Net Margins Reported
|
||||||
|---|---|---|---|---|---|---|
| Net Margins | Q1 2011 Estimated | Q4 2010 Reported | 3Q 2010 Reported | 2Q 2010 Reported | 1Q 2010 Reported | 4Q 2009 Reported |
| Busines Service | 23.81% | 26.17% | 25.48% | 23.39% | 24.21% | 25.35% |
| Computer and Tech | 17.65% | 19.53% | 17.88% | 22.20% | 19.36% | 19.29% |
| Finance | 25.81% | 17.76% | 16.79% | 11.14% | -7.21% | 3.35% |
| Consumer Staples | 8.12% | 10.32% | 9.55% | 7.25% | 8.00% | 10.58% |
| Consumer Discretionary | 7.60% | 8.45% | 19.64% | 9.36% | 8.57% | 7.46% |
| Industrial Products | 5.76% | 5.98% | 6.60% | 5.94% | 5.68% | 6.78% |
| Transportation | 3.57% | 2.94% | 4.02% | 4.44% | 2.75% | 4.01% |
| Retail/Wholesale | 3.86% | 2.92% | 3.02% | 2.86% | 3.91% | 2.72% |
| Basic Materials | 23.77% | 0.55% | -2.56% | 14.99% | 24.22% | -0.77% |
| Medical | na | na | Na | na | na | Na |
| Auto | na | na | Na | na | na | Na |
| Construction | na | na | Na | na | na | Na |
| Conglomerates | na | na | Na | na | na | Na |
| Aerospace | na | na | Na | na | na | Na |
| Oils and Energy | na | na | Na | na | na | Na |
| Utilities | na | na | Na | na | na | Na |
| Medical | na | na | Na | na | na | Na |
| S&P 500 | 4.29% | 3.56% | 3.76% | 3.91% | 3.61% | 3.14% |
| Excl Financials | 4.18% | 3.39% | 3.64% | 3.82% | 3.67% | 3.10% |
Quarterly Net Margins Expected
- Net margins expected to rise to 8.85% from 7.38% a year ago.
- Sequentially margins expected to fall from 9.11% in the third quarter but rebound to 9.20% in the first quarter.
- Excluding financials, margins rise to 8.20% from 7.97% last year but down from 8.80% in the third quarter. Huge jump in financial margins expected.
- Nine sectors expected to see year-over-year growth in margins, seven see declines.
|
Quarterly: Net Margins Expected
|
||||||
|---|---|---|---|---|---|---|
| Net Margins | Q1 2011 Estimated | Q4 2010 Estimated | 3Q 2010 Reported | 2Q 2010 Reported | 1Q 2010 Reported | 4Q 2009 Reported |
| Computer and Tech | 15.14% | 16.03% | 16.41% | 15.28% | 14.99% | 16.20% |
| Finance | 13.60% | 13.70% | 10.94% | 11.51% | 11.22% | 3.89% |
| Busines Service | 12.80% | 11.75% | 11.86% | 11.80% | 11.37% | 11.49% |
| Consumer Staples | 11.84% | 11.27% | 12.02% | 11.05% | 10.80% | 10.52% |
| Transportation | 8.39% | 9.28% | 9.89% | 9.35% | 7.15% | 7.83% |
| Medical | 9.96% | 9.01% | 10.13% | 10.17% | 10.17% | 9.03% |
| Consumer Discretionary | 8.91% | 8.70% | 9.29% | 9.30% | 9.04% | 8.85% |
| Conglomerates | 8.72% | 7.64% | 9.35% | 8.64% | 7.36% | 8.29% |
| Oils and Energy | 7.69% | 7.51% | 7.14% | 8.00% | 7.35% | 6.31% |
| Industrial Products | 7.84% | 6.79% | 7.89% | 7.94% | 6.19% | 5.67% |
| Utilities | 7.98% | 6.40% | 9.08% | 8.27% | 8.03% | 6.82% |
| Aerospace | 6.20% | 6.08% | 6.44% | 6.79% | 5.94% | 6.96% |
| Basic Materials | 7.93% | 6.03% | 6.48% | 6.88% | 6.56% | 5.50% |
| Auto | 5.44% | 5.04% | 5.45% | 6.26% | 5.12% | 4.13% |
| Retail/Wholesale | 4.51% | 3.87% | 3.92% | 4.17% | 3.85% | 4.49% |
| Construction | 1.79% | 1.79% | 2.34% | 3.66% | 1.78% | 1.57% |
| S&P 500 | 9.20% | 8.85% | 9.11% | 9.11% | 8.68% | 7.38% |
| S&P ex Fin’l | 8.60% | 8.20% | 8.80% | 8.69% | 8.22% | 7.97% |
Annual Total Net Income Growth
- Total S&P 500 Net Income in 2009 was 1.30% above 2008 levels, following 34.7% plunge in 2008.
- Total earnings for the S&P 500 expected to jump 42.9% in 2010, 15.1% further in 2011.
- First read of 2012 growth looking for 12.0% growth, but the sample is still thin.
- All sectors expected to show total net income rise in 2011 and in 2012. Twelve by double digits in 2011, 11 in 2012.
- Cyclical sectors expected to lead in earnings growth again in 2011.
|
Annual Total Net Income Growth
|
||||
|---|---|---|---|---|
| Net Income Growth | 2009 | 2010 | 2011 | 2012 |
| Construction | – to – | – to + | 192.10% | 44.29% |
| Industrial Products | -38.63% | 41.32% | 32.61% | 12.80% |
| Basic Materials | -49.90% | 64.62% | 30.30% | 13.08% |
| Finance | – to + | 314.90% | 23.37% | 15.31% |
| Transportation | -30.14% | 43.61% | 20.37% | 15.49% |
| Consumer Discretionary | -15.59% | 19.72% | 19.35% | 14.20% |
| Conglomerates | -23.83% | -0.93% | 19.08% | 16.63% |
| Oils and Energy | -55.94% | 48.84% | 15.73% | 17.58% |
| Business Service | 1.04% | 15.16% | 15.19% | 14.06% |
| Auto | – to + | 2164.27% | 14.01% | 6.79% |
| Computer and Tech | -4.10% | 45.68% | 13.69% | 11.55% |
| Retail/Wholesale | 2.55% | 14.14% | 12.86% | 6.38% |
| Consumer Staples | 5.67% | 11.03% | 9.74% | 9.70% |
| Medical | 2.21% | 8.46% | 7.16% | 5.41% |
| Aerospace | -14.80% | 14.79% | 5.59% | 15.38% |
| Utilities | -13.52% | 1.44% | 3.95% | 6.52% |
| S&P | 1.51% | 42.85% | 15.13% | 11.97% |
Annual Total Revenue Growth
- Total S&P 500 Revenue in 2010 expected to be 4.0% above 2009 levels.
- Total revenues for the S&P 500 expected to rise 5.38% in 2011, 5.58% in 2012.
- Energy to lead revenue race in 2010 and continue lead in 2011 mostly due to higher commodity prices. Industrials, Tech and Transportation also expected to show high revenue growth.
- All sectors but Staples expected to show positive top-line growth in 2011.
- Financials the biggest drag on 2010 revenue growth, Aerospace the only other sector expected to post lower top-line for the year. Revenues for financials are notoriously flakey — low interest rates depress interest income (but also interest expense).
- Revenue growth significantly different if financials are excluded, down 10.46% in 2009, but growth of 8.18% in 2010, 5.88% in 2011 and 5.88 in 2012.
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Annual Total Revenue Growth
|
||||
|---|---|---|---|---|
| Sales Growth | 2009 | 2010 | 2011 | 2012 |
| Oils and Energy | -34.50% | 19.21% | 12.43% | 7.44% |
| Industrial Products | -18.67% | 12.61% | 11.57% | 8.25% |
| Computer and Tech | -5.83% | 13.78% | 9.85% | 7.23% |
| Transportation | -13.65% | 10.70% | 9.23% | 8.48% |
| Basic Materials | -19.30% | 11.75% | 8.73% | 5.77% |
| Auto | -21.36% | 5.21% | 7.95% | 7.42% |
| Consumer Discretionary | -10.05% | 3.43% | 7.56% | 5.41% |
| Construction | -15.92% | 0.14% | 6.14% | 10.05% |
| Business Service | -2.35% | 5.62% | 6.14% | 5.66% |
| Aerospace | 6.30% | -0.48% | 4.81% | 5.57% |
| Medical | 6.05% | 8.69% | 3.39% | 2.74% |
| Retail/Wholesale | 1.45% | 4.51% | 2.93% | 5.18% |
