Photo: Flickr / Jones Photography
One of the ugly themes of Q2 earnings season has been the disappointing revenue announcements. Of the 447 S&P 500 companies that have announced their quarterly financial results, only 43 per cent have beaten analysts’ expectations. This is the lowest beat rate since Q1 2009. This is according to data compiled by FactSet.In contrast, 70 per cent of companies have beaten earnings per share (EPS) estimates.
But it isn’t completely accurate to just say that revenues have been disappointing this quarter.
From FactSet’s John Butters:
Looking at the aggregate surprise percentage for the S&P 500, it is somewhat surprising to see that the percentage is actually positive, at 0.3%. So while more companies have reported sales below estimates than above estimates for Q2, the aggregate actual revenues reported by these 447 companies have been slightly higher (+0.3%) than the aggregate estimated revenues.
That’s not nothing.
One caveat: the revenue surprises are concentrated in one sector. More from Butters:
Digging deeper into these numbers at the sector level, the Energy sector is the largest contributor to the 0.3% surprise percentage for the S&P 500. The sector is reporting the highest surprise percentage (4.2%) of all 10 sectors. Six of the seven companies that reported the largest differences between actual revenues and estimated revenues are Energy sector companies: Sunoco, Range Resources, ConocoPhillips, Chesapeake Energy, Pioneer Natural Resources, and EOG Resources.
Here’s a chart of the 10 companies with the biggest revenue surprises.