“The first quarter earnings season is almost done. We now have 458 (91.6%) of the S&P 500 reports in. We have enough of a sample now to be pretty sure this will be a good earnings season.
So far, we have income growth of 17.9%. While that is down from the extremely strong 32.4% those same 458 firms posted in the fourth quarter, it is still a very strong growth rate. Almost all of the growth slowdown is from a failure of the Financial sector to repeat the massive growth they posted in the fourth quarter.
Tougher Comps for Financials
It’s not that the Financials are having a bad quarter, but they do face much tougher comps this time around. It is not like the 8.7% year-over-year growth they are reporting is awful (although it is below the rest of the S&P 500), it is that it pales in comparison to the 161.8% growth posted in the fourth quarter. That is despite a very strong sequential growth of 22.0%.
If we back out the Financials, total net income is up 19.9% so far, down just slightly from the 20.4% those firms reported in the fourth quarter. Looking ahead to the second quarter, growth is expected to continue to slow, but remain in the double digits at 10.7%. Back out the Financials and growth is expected to be 13.1%.
Revenue growth is also very strong at 9.38%, up from the 9.03% growth they posted in the fourth quarter. Financials are a major drag on revenue growth; if they are excluded, reported revenue growth is 12.14%, up from the 9.26% growth posted last quarter…….”
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