Earning Growth Strong Across Corporate America

Tiffany
Tiffany

S&P 500 companies have nearly completed the second-quarters earnings season, and overall, investors don't have much to complain about.

More than 70% of companies have beaten earnings estimates, the index's earnings have risen more than 19% from last year, and nine of 10 sectors have given us a positive earnings surprise. Telecom was the only sector that missed analyst expectations.

Consumer Companies Are Standing Strong

We found out last week that the consumer was alive and well across most of the S&P 500. This week that trend continued on the top and bottom of the consumer market.

Discount retailer Big Lots (BIG) reported earnings of $0.52 per share, topping consensus estimates by $0.08. And it was no surprise that premium jeweler Tiffany & Co. (TIF), serving the top end of the market, was even stronger in the second quarter. The company reported earnings per share of $0.86, crushing estimates of $0.70.

Consumer-focused companies are strong overall right now, but earnings have shown the top end of the market is holding on much stronger. Not that that should be a surprise.

Sector

Above

Match

Below

Surprise

Reported

Index

Consumer discretionary

78%

9%

13%

9.8%

78

79

Consumer staples

74%

11%

16%

1.7%

38

41

Energy

71%

0%

29%

6.9%

41

41

Financials

67%

9%

25%

12.4%

81

81

Health care

73%

19%

8%

5.0%

52

52

Industrials

66%

9%

26%

3.7%

58

60

Information technology

81%

8%

11%

12.8%

73

75

Materials

63%

7%

30%

1.2%

30

30

Telecom

38%

25%

38%

(4.6%)

8

8

Utilities

55%

12%

33%

2.6%

33

33

S&P 500

71%

10%

20%

7.3%

492

500


Source: Capital IQ Consensus Estimates, a division of Standard & Poor's

Focus Moving to the Third Quarter

There are only five S&P 500 companies reporting this week as we roll the calendar into the last month of the second quarter.

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Maker of mining equipment Joy Global (JOYG) is expected to report earnings of $1.55 per share, up from $1.13 last year. And analysts are expecting chicken noodle soup expert Campbell Soup (CPB) to report earnings of $0.38 per share.

After that, we get a breather for the next month -- until we start the game all over again.

With the market concerned about a possible double-dip recession, third quarter results may provide an even more important indicator. If earnings are strong again, we could see the market surge and confidence return. But if earnings flounder, we could be in for a long winter.

Motley Fool contributor Travis Hoium does not have a position in any company mentioned.


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