Health Care and Tech stand out positively on a few of our earnings-related sector stats
Over the past few weeks, we’ve been highlighting how beat rates have been high but that the companies beating consensus EPS forecasts haven’t been outperforming the broader market in terms of their immediate price reaction.
This week we’ve dug into those stats a bit deeper, looking at sector trends. Within the Russell 1000 there have been three sectors defying this trend which are seeing beats outperform – these are Energy, Health Care, and Utilities.
Like the broader market, most sectors in the S&P 500 have been seeing positive revisions on consensus forecasts for both EPS and revenues. However, the Technology sector has been the strongest on both stats, followed by Communication Services and Financials.
Interestingly, Tech is also the only S&P 500 sector where bottom-up consensus operating margin forecasts have moved up recently for both 2Q and 3Q. The overall S&P 500 has seen margin forecasts slip for both time periods recently.
“Revisions are stronger in Tech, but valuations are more appealing in Health Care.”
Lori Calvasina, Head of U.S. Equity Strategy, RBC Capital Markets
In addition to standing out in a positive way on some of our stats, the other thing these two sectors have in common is that their tone has generally been better than that of other sectors throughout reporting season. We’ve been market weight both sectors. Revisions are stronger in Tech, but valuations are more appealing in Health Care.
