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Three weeks of earnings -- it's clear which sectors are strongest now

Three weeks of second quarter earnings season are in the books. Here's the status so far broken down by sector (analysis is provided below):

Sector Earnings Beats Y-o-Y Earnings Increases Y-o-Y Revenue Increases Upside Guidance Total Providing Guidance Total Number of Stocks Reporting
Basic Industries 48 54 65 9 23 72
Capital Goods 104 95 99 21 56 124
Consumer Durables 69 67 77 12 43 91
Consumer Non-Durables 47 42 45 5 27 64
Consumer Services 106 90 111 10 81 152
Energy 52 43 53 1 11 78
Finance 105 98 57
0
9 171
Health Care 82 77 92 14 69 113
Miscellaneous 23 27 31 4 24 42
Public Utilities 29 23 31 4 17 45
Technology 163 170 207 36 136 238
Transportation 35 34 38 2 3 42
Totals 863 820 906 118 499 1232

Before getting into individual sectors, let's start by looking at some of the totals and calculating the percentages.
  • Earnings beats:  70%
  • Year-over-Year Earnings Increases: 66.5%, down a few percent compared to last week's results
  • Year-over-Year Revenue Increases: 73.5%
  • Upside Guidance out of those providing guidance: 24%, down about two percent compared to last week
  • Upside Guidance out of total stocks reporting: 10%
Unless otherwise noted, this week's percentages are pretty similar to last week's. These summary numbers show that as earnings season has progressed, company fundamentals have remained pretty strong.

Here are a few more ways of looking at the results:
  • There are 212 companies (17% of those that have reported) that have exceeded earnings estimates by 20% or more. 
  • There are 626 companies (almost 51%) that have registered year-over-year increases in earnings of 20% or more.
  • There are 371 companies (30%) that have registered year-over-year increases in revenues of 20% or more.

Sector results --

There are several sectors that seem to be faring particularly well:
  • Capital Goods and Transportation have the most earnings beats at over 80%
  • Consumer Durables, Consumer Non-Durables, Health Care and Consumer Services registered between 70% and 76% earnings beats
  • Transportation has the highest percentages of y-o-y earnings increases (81%) and y-o-y revenue increases (90%)
  • Between 71% and 77%  of the companies in the Capital Goods, Basic Industries, Consumer Durables and Technology sectors have registered y-o-y earnings increases
  • Between 80% and 90% of companies in the Capital Goods, Basic Industries, Consumer Durables and Technology sectors have registered y-o-y revenue gains

Investors have been especially interested in guidance this quarter due to the worries about the economy slowing in the second half of the year. Only about 40% of companies have offered forward guidance so far this earnings season. Here's how it looks:
  • Transportation has the highest percentage of upside guidance but it is only 2 out of 3 companies so it can effectively be ignored
  • Roughly 38% of companies in the Basic Industries and Capital Goods sectors have provided upside guidance
  • Consumer Durables and Technology are next with 28% and 26% of companies, respectively, in each sector offering upside guidance
Noticeable by its absence in our discussion above is the Financial sector which continues to rank near the bottom in terms of our earnings season performance.

If you are interested in using this data to guide your investing, there are many sector ETFs that will fairly closely match the sector results discussed above.

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