3 Factors Define Q4 Earnings Season (So Far)

 | Feb 01, 2015 02:10AM ET

The story of the unfolding Q4 earnings season is essentially a commentary on three inter-related factors – oil, the U.S. dollar and global economic growth. Oil aside, the other two factors have been at play in other recent quarters as well. But all three have really come into their own in pushing down corporate profitability.

We are seeing this in play in the Q4 results and in the estimates for the current and following quarters. In fact, estimates for 2015 Q1 and Q2 have fallen so sharply in recent days that earnings growth in the first half of 2015 has effectively evaporated under the combined weight of these factors.

And then you have Apple (NASDAQ:AAPL, which seems to be totally immune from all these headwinds, with top and bottom-line growth rates that would be the envy of any company, let alone an operator this big. Apple’s revenue and earnings numbers are so big that they have a material bearing on the aggregate growth picture for the S&P 500 index as well. You have to isolate the ‘Apple Effect’ to get a true sense of the earnings growth pace at this stage in reporting cycle for the index as well as the Tech sector.

With results from more than half of the market cap of the S&P 500 index already out, the broad trends established already are unlikely to change in any meaningful way in the coming days. But the earnings season is far from over, with a super busy reporting docket this week comprised of almost 500 companies, including 95 S&P 500 members.

h3 The Q4 Scorecard (as of 1/30/2015)/h3

We have seen Q4 results from 228 S&P 500 members that combined account for 60.3% of the index’s total market capitalization. Total earnings for these companies are up +5.5% from the same period last year, with 72.4% beating EPS estimates. Total revenues are up +1.7% from the same period last year and 53.1% of them are coming ahead with top-line estimates.

The table below shows the current scorecard for the S&P 500 index