News Column

Quarterly earnings for financials could be disappointing

July 8, 2014

A: It'll be easy to tell which investors are betting heavily on financial companies. They'll be the only ones frowning during earnings season.

Nine of the 10 sectors of the Standard & Poor's 500 are expected to post earnings growth during the second quarter. What's the one sector left out? Financials. The financials sector is expected to post 1.3% lower earnings in the second-quarter, says S&P Capital IQ.

A 1.3% earnings decline might not sound all that bad, until you consider analysts are calling for a re-acceleration of growth in the second quarter.

Earnings are expected to rise 6.6% for the S&P 500, up from the 4.9% growth in the second-quarter of 2013 and 3.4% growth in the first-quarter of 2014.

Financials is one of two sectors in the S&P 500 expected to post a decline in revenue during the second quarter. Analysts are calling for a 0.6% drop in revenue in the financial sector, while the rest of the S&P 500 is on pace to report 4.1% higher revenue.

The biggest decline in revenue is expected to be experienced in the telecom sector, falling 11.4%.

Investors hope the decline in financials is short-lived.

Analysts are calling for 3.7% earnings growth in the financial sector in the third quarter.

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Source: USA Today

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