Q4 and Q1 S&P 500 Sector Earnings Growth

Below we highlight Q4 2011 year over year earnings growth numbers by sector.  These growth readings are based on the 94% of S&P 500 companies that have reported, according to Bloomberg.  In the chart, we also include what the earnings growth estimates were for each sector at the start of earnings season.

As shown, the Industrials sector saw the biggest earnings growth in Q4 at 15.5%.  Technology ranked second at 13.3%, followed by Energy at 9% and Consumer Discretionary at 6.8%.  The S&P 500 as a whole saw year over year growth of 5.7%.  Four sectors saw earnings decline in Q4 -- Telecom, Materials, Financials and Utilities.

Below is a chart showing the difference, in percentage points, between the actual and estimated growth readings of S&P 500 sectors in Q4 2011.  As shown, Industrials beat estimates by the most at 7.9 percentage points.  Technology was the second strongest at 6.5 percentage points, followed by Consumer Discretionary at 3.8.  The S&P 500 as a whole came in just 0.3 percentage points below expectations. 

The Energy sector did the worst versus expectations.  At the start of earnings season, the Energy sector was expected to see Q4 earnings growth of 20.8%, but its actual growth came in at just 9%.  The Materials, Financials and Telecom sectors all had weaker than expected growth readings as well.

Looking ahead to next earnings season, below we highlight Q1 year-over-year earnings growth estimates for the S&P 500 and its ten sectors (using Bloomberg estimates).  As shown, the Industrials sector is expected to see the strongest growth at 8.3%, followed by Technology at 3.5% and Consumer Staples at 0.5%.  These are the only three sectors that are currently expected to see year over year growth in earnings in the first quarter.  The Materials sector is expected to see the weakest growth reading in Q1 at -13%.

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