Feb 14, 2020 - Economy & Business

Earnings on pace for a strong rebound

Data: FactSet; Chart: Axios Visuals

Thanks to a cadre of better-than-expected earnings results from the companies that have reported their fourth-quarter earnings so far, the earnings growth rate for the S&P 500 has risen to 0.7%.

Why it matters: That is a far cry from the estimated earnings decline of -1.7% at the end of the quarter. If it holds, this would mark the first time the index has reported year-over-year growth in earnings since Q4 2018. 

What's happening: Positive earnings surprises have led to a net $8.5 billion increase in earnings for the index since Dec. 31, FactSet senior earnings analyst John Butters notes.

  • This has been driven largely by IT companies, which have accounted for $5.4 billion of the net $8.5 billion increase (or about 63%).
  • "The positive earnings surprises reported by Apple ($4.99 vs. $4.55), Microsoft ($1.53 vs. $1.32), and Intel ($1.52 vs. $1.25) were substantial contributors to the increase in earnings for the index during this time," Butters says.

Go deeper: S&P 500 earnings continue to improve

Go deeper

S&P 500 earnings on pace for 4th straight negative quarter

Traders at the New York Stock Exchange on Jan. 8. Photo: Wang Ying/Xinhua via Getty) (Xinhua/Wang Ying via Getty Images

Strong earnings reports from buzzy tech companies like Amazon and Microsoft have dominated headlines, but the numbers for the broader market remain negative.

What's happening: With 45% of S&P 500 having reported earnings, FactSet estimates an overall earnings decline of 0.3% for the quarter.

S&P 500 earnings continue to improve

With more than half of the companies on the S&P 500 having reported earnings, the consensus estimate for fourth-quarter earnings is down just 0.1% from three weeks ago. That's well above the 1.3% average decline for the past five years, excluding 2018, which was boosted significantly by the Tax Cuts and Jobs Act.

By the numbers: So far, 22% of S&P companies have revised first-quarter profit targets higher, the highest percentage since Q2 2018 and third-highest since 2012, Bloomberg data show.

Alphabet lifts the hood on YouTube financials

Photo: Aytac Unal/Anadolu Agency/Getty Images

Disclosing YouTube revenue separately for the first time, Alphabet said Monday that the Google-owned video site accounted for more than 10% of the company's $46.1 billion in revenue last quarter, and more than $15 billion for the year.

Why it matters: Everyone knew YouTube was a big business, but until now, we didn't know exactly how big.