Blog — 22 Dec, 2023
S&P 500 Q3 2023 Sector Earnings & Revenue Data
By Nicholas Ephraim
Highlights
In Q3 2023, 80% of S&P 500 constituents surpassed EPS expectations vs. S&P Capital IQ Estimates, up 1% from Q2 (79%), up 3% from Q1 (77%), and well above Q4 2022 (68%).
Year-over-year, the S&P 500 recorded an EPS growth rate of 13.9%, increasing significantly from 4.3% in Q2, and 2.6% in Q1.
63% of S&P 500 constituents surpassed Revenue expectations vs. S&P Capital Estimates, down 1% from Q2 2023 (64%), down 11% since Q1 (74%), and 3% below Q4 2022 (66%).
EPS Beats and Misses %
In Q3 2023, 80% of S&P 500 constituents surpassed EPS expectations vs. S&P Capital IQ Estimates, up 1% from Q2 (79%), up 3% from Q1 (77%), and well above Q4 2022 (68%). The increasing number of firms surpassing estimates signals that the U.S. market is more resilient and less volatile than global markets, a 2023 trend that should continue into 2024 on the hopeful prospects of decreasing interest rates and the continued investment in powerful technology like generative AI.
Among tracked sectors, Information Technology once again was the highest performer, with 89% of constituents surpassing EPS estimates. Indeed, Information Technology has outperformed analyst expectations by an average of 86% over the last four quarters, the highest year-long average of all the individual sectors. Within the sector, the firms with the highest percentage EPS beats in Q3 were Intel Corporation (NasdaqGS:INTC) with 86.7%, Qorvo, Inc. (NasdaqGS:QRVO) with 34.9%, Gartner, Inc. (NYSE:IT) with 30.6%, Intuit Inc. (NasdaqGS:INTU) with 24.8%, and First Solar, Inc. (NasdaqGS:FSLR) with 22.6%.
After Information Technology, Consumer Discretionary was the next highest performing sector with 87% of firms outperforming EPS estimates, up 2% from Q2 (85%), and up 6% from Q1 (81%). Consumer Discretionary also had the second highest last-four-quarter average at 83%. The third highest was Communication Services with 84%, followed closely by Industrials with 83%. The lowest performing sector of the quarter was Real Estate with 52%, a significant drop from 76% in Q2, and still well below Q1 (66%). Real Estate also had the lowest last-four-quarter average at 62%. After Real Estate, the next lowest sector was Utilities at 72%, followed by Energy with 74%.
EPS Growth %
Year-over-year, the S&P 500 recorded an EPS growth rate of 13.9%, increasing significantly from 4.3% in Q2, and 2.6% in Q1. The strong growth year-over-year since Q3 2022 highlights the positive performance of the index this year despite the headwinds that still challenge markets a year later. Those headwinds remained apparent in the four sectors that saw EPS shrink this quarter, with Real Estate at -44.3%, Energy at -33.7%, Health Care at -5.1%, and Materials at -4.3%.
Communication Services was the highest performing sector year-over-year, recording a 63.0% growth rate. The sector dethroned Consumer Discretionary, which had been the highest growth sector the last two quarters. Anchoring Communication Services were the strong year-over-year performances of The Walt Disney Company (NYSE:DIS), which had 0.30 EPS in Q3 ’22 vs. 0.82 in Q3 ’23; Meta Platforms, Inc. (NasdaqGS:META), with 1.64 EPS in Q3 ’22 vaulting to 4.39 in Q3 ’23; Alphabet, Inc. (NasdaqGS:GOOGL) from 1.06 EPS in Q3 ’22 up to 1.55 in Q3 ’23; and Electronic Arts, Inc. (NasdaqGS:EA) 1.25 EPS in Q3 ’22 vs. 1.83 in Q3 ’23.
After Communication Services, the next highest performing sector year-over-year was Information Technology. Strong performers in the sector included NVIDIA Corporation (NasdaqGS:NVDA), jumping from 0.58 EPS in Q3 ’22 to 4.02 in Q3 ’23; Palo Alto Networks, Inc. (NasdaqGS:PANW), with 0.83 EPS in Q3 ’22 vs. 1.38 in Q3 ’23; and Synopsys, Inc. (NasdaqGS:SNPS), climbing from 1.91 EPS in Q3 ’22 to 3.17 in Q3 ’23. Consumer Discretionary was the next highest growth sector with 24.3%, followed closely by Financials with 21.5% year-over-year growth. Also seeing year-over-year increases were Industrials (13.6%), Utilities (9.4%), and Consumer Staples (8.5%).
Revenue Beats and Misses %
In Q3 2023, 63% of S&P 500 constituents surpassed Revenue expectations vs. S&P Capital Estimates, down 1% from Q2 2023 (64%), down 11% since Q1 (74%), and 3% below Q4 2022 (66%).
Among sectors, Communication Services had the highest percentage of firms surpassing analyst estimates at 79%, well above Q2 (30%), Q1 (57%), and Q4 ’22 (50%). This marks a rebound from the 2023 trend that saw Communication Services struggling, with a last-four-quarter average of just 54% of firms surpassing revenue estimates. That ties Energy as the second lowest sector, underperformed only by Materials with 38%. In Q3, however, only four Communication Services companies missed Revenue estimates this quarter: The Walt Disney Company (NYSE:DIS), T-Mobile US, Inc. (NasdaqGS:TMUS), Charter Communications, Inc. (NasdaqGS:CHTR), and The Interpublic Group of Companies, Inc. (NYSE:IPG). Financials was the next highest sector in Q3 with 75%, followed by Consumer Discretionary with 72%.
The lowest performing sector of the quarter was Utilities with 27%. This marks a sharp downturn from a year ago, when the sector finished Q4 ’22 and Q1 ’23 with 90% and 80% of firms surpassing revenue estimates, respectively. By Q2, however, only 41% of firms outperformed revenue estimates and that number fell by another 14% this quarter. After Utilities, Materials was the next lowest sector with 45%, followed by Consumer Staples with 53%.
YoY Revenue Growth %
In Q3 2023 the S&P 500 recorded a year-over-year revenue growth rate of 5.9%, up from 3.9% in Q2 and Q1. Real Estate was the highest performing sector, increasing 11.8% year-over-year, up from its Q2 growth rate of 9.3%, and slightly above Q1 (10.5%). Driving the sector’s success were strong increases from Prologis, Inc. (NYSE:PLD) with 35.2% year over-year revenue growth, Extra Space Storage Inc. (NYSE:EXR) with 34.1%, Realty Income Corporation (NYSE:O) with 18.1%, VICI Properties Inc. (NYSE:VICI) with 16.9%, and Digital Realty Trust, Inc. (NYSE:DLR) with 15.0%.
After Real Estate, the next highest growth sector was Communication Services at 11.2%, followed closely by Consumer Discretionary with 10.9%. Financials, Information Technology, Health Care, and Consumer Staples also reported revenue growth year-over-year. Only four sectors saw revenue decline year-over-year: Energy with -18.7%, Materials with -8.0%, Utilities with -3.5%, and Industrials with -0.8%.
Source: S&P Capital IQ Pro. Data as of December 18, 2023.