12 Best & Worst Broker-Dealers: Q4 Earnings, 2018

The final earnings season of last year came after a volatile time in the markets and was a bit of a let down.

The good news is that nearly 70% of companies reported actual EPS above estimates — including Bank of America, Citigroup and Goldman Sachs. The bad news is that that figure is below the 5-year average, according to the research group FactSet.

“In aggregate, companies are reporting earnings that are 3.3% above the estimates, which is also below the 5-year average,” according to John Butters, senior earnings analyst.

Overall, FactSet estimates that the average year-over-year earnings growth rate for S&P 500 companies in the fourth quarter is 13.1% — making it the first time the index has not reported earnings growth above 20% since Q4’17. Still, these results represent the fifth-straight quarter of double-digit earnings growth for the index.

The financials sector is the only sector that had a year-over-year decline in revenues in Q4’18 at -5.6%, as trading declined along with asset flows and total asset levels. The diversified-financial services subsector had a large drop, -53%, with other subsectors posting modest gains.

For full-year 2018, financial firms had earnings growth of about 22%. In Q4’18, it was 8%, but in Q1’19, this figures could drop to -2%.

Financial firms generally reported big year-over-year jumps, since Q4’17 results were negatively affected by one-time charges tied to tax reforms. In Q4’18, on the other hand, they announced one-time benefits.

Looking ahead, FactSet says its analysts predict a decline in overall S&P 500 earnings for Q1’19 of 3.2% and low single-digit growth in earnings for the second (0.3%) and third (1.9%) quarters of 2019.

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