Blog — 13 Sep, 2023
S&P 500 Q2 2023 Sector Earnings & Revenue Data
By Nicholas Ephraim
Highlights
79% of S&P 500 constituents surpassed EPS expectations vs. S&P Capital IQ Estimates, a 2% increase compared to Q1 2023 (77%), and an 11% increase from Q4 2022 (68%).
64% of firms in the S&P 500 outperformed S&P Capital IQ Estimates for revenue in Q2, dropping 10% from Q1 2023 (74%), and 2% from Q4 2022 (66%).
EPS Beats and Misses %
In Q2 2023, 79% of S&P 500 constituents surpassed EPS expectations vs. S&P Capital IQ Estimates, a 2% increase compared to Q1 2023 (77%), and an 11% increase from Q4 2022 (68%). Leading the individual sectors were Health Care and Information Technology with 89% of constituents outperforming EPS estimates. Both sectors have steadily increased over the last few quarters, with Health Care increasing 13% since Q4 2022, and Information Technology improving 9% over the same. After Health Care and Information Technology was Consumer Discretionary with 85% of constituents surpassing EPS estimates. Although Consumer Discretionary hasn’t increased as much as the top two sectors, it’s increased 4% from Q1 2023 (81%), and 7% from Q4 2022 (78%). Rounding out the top five was Communication Services with 79% and Consumer Staples with 78%. These two sectors are especially interesting considering both experienced tremendous quarter-over-quarter changes, with Communication Services increasing 17% from Q1 to Q2, while Consumer Staples the highest performing sector last quarter decreased 12%. Communication Services in general has increased substantially this year, going from 52% in Q4 2022 to 79% in Q2 2023. That’s the highest increase from Q4 2022 with Real Estate being the only other sector to come close, going from 55% in Q4 2022 to 76% in Q2 2023. The sector with the lowest percentage of firms surpassing EPS estimates was once again Utilities with 66%. Although Utilities did increase 6% compared to Q1 2023 (60%), it was the only sector this quarter not to make it above 70%. After Utilities, Materials was the next lowest sector with 72%, decreasing 14% from Q1 (86%). Following Materials closely and rounding out the bottom three was Industrials with 73%.
EPS Growth %
Year-over-year, the S&P 500 recorded an EPS growth rate of 4.3%, increasing slightly from 2.6% in Q1 2023 and 0.8% in Q4 2022. Although EPS growth has increased over the last few quarters, it’s still well below where it was in Q3 2022 (9.2%). This quarter we observed negative earnings growth from four of the eleven sectors, including Energy (-48.8%), Materials (-8.2%), Health Care (-6.2%), and Real Estate (-5.5%). Continuing its momentum from last quarter, Consumer Discretionary was again the top performing sector with a 33.0% EPS growth rate, led by strong showings from Booking Holdings Inc. (NasdaqGS:BKNG), AutoZone, Inc. (NYSE:AZO), and Chipotle Mexican Grill, Inc. (NYSE:CMG). Following Consumer Discretionary was Information Technology with an EPS growth rate of 19.1%, increasing from last quarter’s blended growth rate of 1.3%. Information Technology received a boost this quarter from big names such as NVIDIA Corporation (NasdaqGS:NVDA), Microsoft Corporation (NasdaqGS:MSFT) and Salesforce, Inc. (NYSE:CRM). Also recording double-digit EPS growth rates this quarter were Communication Services and Industrials with 13.4% and 12.5% respectively. Financials, Consumer Staples, and Utilities all recorded positive growth this quarter.
Revenue Beats and Misses %
64% of firms in the S&P 500 outperformed S&P Capital IQ Estimates for revenue in Q2, dropping 10% from Q1 2023 (74%), and 2% from Q4 2022 (66%). Health Care led the individual sectors with 84% of firms surpassing revenue estimates, increasing 5% from Q1 2023, and 16% from Q4 2022. Rounding out the top three were Financials and Consumer Discretionary, both with 74% of constituents outperforming analyst revenue estimates. Though both are in the top three, Financials increased 7% since last quarter, while Consumer Discretionary fell 11% over the same. Following up the top three were Real Estate and Information Technology both with 71%. Last quarter Information Technology was part of the top three, but this quarter decreased 10%. We’ve seen this type of decline quite prevalently in the S&P 500, with eight of the eleven sectors posting decreases from the previous quarter.
YoY Revenue Growth %
Overall, Q2 2023 revenue for the S&P 500 recorded a blended growth rate of 3.9%, year-over-year, a very slight decrease from 4.0% in Q1 2023, but 1.0% above Q4 2022. Financials was the highest revenue growth sector of the quarter with 19.1%, followed by Consumer Discretionary with 11.9%. Financials and Consumer Discretionary were also the only two sectors to record double digit revenue growth this quarter. Real Estate rounded out the top three with 9.3% revenue growth but fell 1.7% from last quarter. Following Real Estate closely was Industrials and Communication Services, with 6.7% and 6.6% respectively. Energy was the worst performing sector of the quarter, recording a -28.8% revenue growth rate, contributed by sharp revenue declines from big names including Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), and Marathon Petroleum Corporation (NYSE:MPC). Materials also recorded negative revenue growth this quarter with -9.0%. Utilities rounded out the bottom three for revenue growth with 2.9%, which is interesting given last quarter it had the highest growth. The decline for Utilities could be attributed to poor showings from The Southern Company (NYSE:SO), DTE Energy Company (NYSE:DTE), and Consolidated Edison, Inc. (NYSE:ED).