Key Points:
Q1 2018 Earnings Review
- S&P 500 companies: Median +9% sales and +22% EPS growth. Second-best revenue surprise (+1.7%) in eight quarters and best EPS surprise (+4.9%) in six years.
- Best growth in Energy, Cap, Tech, Retail sectors.
- S&P 600 companies: Median +9% sales and +17% EPS growth.
- Best growth in Energy, Cap, HC, Transports.
- USFL earnings: 27 of 72 with sales/EPS growth acceleration. All but nine beat on revenues and all but six beat on EPS.
- 20 stocks with sales/EPS acceleration, sales/EPS beat, and positive reaction to earnings. Of these, BABA, CRM, SCHW, TCBI, UNH, VEEV are actionable now.
2019 Earnings Deceleration
- With big 2018 jump, 2019 S&P earnings to decelerate (~+18% to ~+10%), a risk to be aware of next year.
- Since 1960, 14 instances of similar deceleration (see below).
- Average 7% annual gain in decelerating year, versus 14% year before.
- Four years of negative returns in 14 periods (1974, 1977, 1994, 2000).
