Earnings Season Recap And Q1 Preview

By: Wayne Duggan

March is coming to a close, bringing an end to the Q4 2017 earnings season. As we line up our strategies for the rest of 2018, let’s step back and take a look at how each of the sectors reported.

Q4 Earnings Winners And Losers

FactSet has a very good breakdown of which sectors exceeded Wall Street’s expectations, and which didn’t. In the fourth quarter, the materials sector reported the highest average earnings upside relative to estimates. Materials stocks beat consensus EPS forecasts by an average of 11.1 percent, edging out consumer discretionary (9.3 percent) and telecom (7.4 percent) as the sectors with the most earnings upside.

Once again, the energy sector lagged the market in the fourth quarter. Average earnings among energy companies missed consensus estimates by an average of 12.2 percent in the fourth quarter. The only other sector that reported average earnings below market expectations was the utilities sector, which missed by an average of 4.5 percent.

You can see that breakdown here.

Source: FactSet

Q4 Revenue Winners And Losers

Looking at total revenue tells a little bit of a different story.

While energy stocks may have disappointed on EPS in the fourth quarter, the sector averaged a 3.6 percent revenue beat, the highest of any sector in the market. That was closely followed by materials (2.5 percent) and technology (2.0 percent) as the sectors with the most revenue upside in the fourth quarter.

On the other end of the spectrum, the utilities sector was the only sector to report average revenue below consensus expectations, missing the mark by 1.3 percent.

Source: FactSet

In terms of performance, the Consumer Discretionary Select Sector SPDR ETF (XLY) outperformed all other sector ETFs in the past three months with a 6.5 percent overall gain. The Technology Select Sector SPDR ETF (XLK) was also a top performer, gaining 5.7 percent. The worst-performing sector ETF of the past three months was the Utilities Select Sector SPDR ETF (XLU), which declined by 6.0 percent.

The author has no positions in the ETFs mentioned. Images and data courtesy of FactSet.

This article includes information from sources believed to be reliable and accurate as of the date of the publication, but no independent verification has been made and we do not guarantee its accuracy or completeness.

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