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1 EARNINGS INSIGHT John Butters, VP, Sr. Earnings Analyst Media Questions/Requests S&P 500 October 28, 2016 Key Metrics Earnings Scorecard: As of today (with 58% of the companies in the S&P 500 reporting earnings for Q3 2016), 74% of S&P 500 companies have reported earnings above the mean estimate and 58%of S&P 500 companies have reported sales above the mean estimate. Earnings Growth: For Q3 2016, the blended earnings growth rate for the S&P 500 is 1.6%. If the index reports growth in earnings for the quarter, it will mark the first time the index has seen year-over-year growth in earnings since Q (0.5%). Earnings Revisions: On September 30, the estimated earnings decline for Q was -2.2%. All eleven sectors have higher growth rates today (compared to September 30) due to upside earnings surprises, led by the Real Estate sector. Earnings Guidance: For Q4 2016, 36 S&P 500 companies have issued negative EPS guidance and 21 S&P 500 companies have issued positive EPS guidance. Valuation: The forward 12-month P/E ratio for the S&P 500 is This P/E ratio is above the 5-year average (14.9) and the 10-year average (14.3). To receive this report via , please go to: To view other market stories with FactSet content, please go to: All data published in this report is available on FactSet. Please contact or FACTSET for more information. FactSet.com Copyright 2016 FactSet Research Systems Inc. All rights reserved. 1

2 Topic of the Week: S&P 500 Now Reporting Earnings Growth (1.6%) for Q EARNINGS INSIGHT October 28, 2016 The blended (combines actual results for companies that have reported and estimated results for companies yet to report) earnings growth rate for the S&P 500 is 1.6%, which is above the year-over-year blended decline of -0.5% at the end of last week and the year-over-year estimated decline of -2.2% at the end of the third quarter (September 30). If the index reports growth in earnings for the quarter, it will mark the first time the index has seen year-over-year growth in earnings since Q (0.5%). It is not surprising that the earnings growth rate for the third quarter turned positive during this earnings season. For more details, please see page 2 of the FactSet Earnings Insight report published on October 7 at the following link: What is driving the increase in the earnings growth rate for the quarter? In aggregate, the upside earnings surprises reported by S&P 500 companies to date have led to a $10.1 billion increase in earnings for the index since September 30 (as higher actual earnings replace estimated earnings in the growth rate calculation). At the sector level, all eleven sectors have contributed to this increase in earnings. However, the Financials sector has been the largest contributor of all eleven sectors to the rise in earnings growth for the index since the end of the third quarter. This sector accounts for $3.6 billion (or 36%) of the $10.1 billion increase in earnings for the S&P 500 since September 30. In the Financials sector to date, 87% of companies have reported actual EPS above estimated EPS, which is tied for the second highest percentage (with the Information Technology sector) of all eleven sectors. Companies in this sector are reporting earnings in aggregate that are 9.1% above estimates, which is the fourth highest surprise percentage of all eleven sectors. The upside earnings surprises reported by Bank of America ($0.41 vs. $0.34), JPMorgan Chase ($1.58 vs. $1.39), Goldman Sachs ($4.88 vs. $3.82), Morgan Stanley ($0.81 vs. $0.63), American Express ($1.24 vs. $0.97), and Citigroup ($1.24 vs. $1.15) were all substantial contributors to the overall increase in earnings growth for the index since September 30. As a result, the blended earnings growth rate for the Financials sector has increased to 8.0% from 0.2% during this period. This is the second highest percentage point increase in earnings growth of all eleven sectors since September 30. FactSet.com Copyright 2016 FactSet Research Systems Inc. All rights reserved. 2

3 Q Earnings Season: By the Numbers Overview With 58% of the companies in the S&P 500 reporting actual results for Q3 to date, more companies are reporting actual EPS (74%) and actual sales (58%) above estimates compared to the 5-year averages. In aggregate, companies are reporting earnings that are 6.7% above the estimates. This percentage is above the 5-year average (+4.4%). The blended (combines actual results for companies that have reported and estimated results for companies yet to report) earnings growth rate for Q is 1.6%. If the index reports growth in earnings for the quarter, it will mark the first time the index has seen year-over-year growth in earnings since Q (0.5%). Eight sectors are reporting year-over-year earnings growth, led by the Real Estate, Utilities, and Financials sectors. Three sectors are reporting a year-over-year decline in earnings, led by the Energy sector. The blended sales growth rate for Q is 2.7%. If the index reports growth in sales for the quarter, it will mark the first time the index has seen year-over-year growth in sales since Q (2.0%). Eight sectors are reporting yearover-year growth in revenues, led by the Consumer Discretionary, Real Estate, and Health Care sectors. Three sectors are reporting a year-over-year decline in revenues, led by the Energy sector. The forward 12-month P/E ratio is now 16.4, which is above the 5-year and 10-year averages. During the upcoming week, 134 S&P 500 companies (including 1 Dow component) are scheduled to report results for the third quarter. More Companies Beating EPS and Sales Estimates To Date than Average Percentage of Companies Beating EPS Estimates (74%) is Above 5-Year Average Overall, 58% of the companies in the S&P 500 have reported earnings to date for the third quarter. Of these companies, 74% have reported actual EPS above the mean EPS estimate, 8% have reported actual EPS equal to the mean EPS estimate, and 18% have reported actual EPS below the mean EPS estimate. The percentage of companies reporting EPS above the mean EPS estimate is above the 1-year (70%) average and above the 5-year (67%) average. At the sector level, the Utilities (100%), Information Technology (87%), and Financials (87%) sectors have the highest percentages of companies reporting earnings above estimates, while the Telecom Services (50%) sector has the lowest percentage of companies reporting earnings above estimates. Earnings Surprise Percentage (+6.7%) is Above 5-Year Average In aggregate, companies are reporting earnings that are 6.7% above expectations. This surprise percentage is above the 1-year (+4.8%) average and above the 5-year (+4.4%) average. The Energy (+38.4%), Real Estate (+17.8%), Utilities (+13.6%), and Financials (+9.1%) sectors are reporting the largest upside aggregate differences between actual earnings and estimated earnings. In the Energy sector, Chevron ($0.72 vs. $0.37) has reported the largest upside earnings surprise. In the Real Estate sector, Digital Realty Trust ($1.25 vs. $0.27) and AvalonBay Communities ($2.59 vs. $1.17) have reported actual results above mean EPS estimates by the widest margins. In the Utilities sector, DTE Energy ($1.96 vs. $1.62) and SCANA ($1.32 vs. $1.11) have reported the largest upside earnings surprises. In the Financial sector, E*TRADE ($0.51 vs. $0.39), Morgan Stanley ($0.81 vs. $0.63), American Express ($1.24 vs. $0.97), and Goldman Sachs ($4.88 vs. $3.82) all reported actual EPS that exceed estimated EPS by more than 25%. Percentage of Companies Beating Revenue Estimates (58%) is Above 5-Year Average In terms of revenues, 58% of companies have reported actual sales above estimated sales and 42% have reported actual sales below estimated sales. The percentage of companies reporting sales above estimates is above the 1- year average (50%) and above the 5-year average (54%). At the sector level, the Information Technology (77%), Financials (73%), and Real Estate (70%) sectors have the highest percentages of companies reporting revenues above estimates, while the Telecom Services (0%) and Utilities (29%) sectors have the lowest percentages of companies reporting revenues above estimates. FactSet.com Copyright 2016 FactSet Research Systems Inc. All rights reserved. 3

4 Revenue Surprise Percentage (+0.8%) is Above 5-Year Average EARNINGS INSIGHT October 28, 2016 In aggregate, companies are reporting sales that are 0.8% above expectations. This surprise percentage is above the 1-year (0.0%) average and above the 5-year (+0.6%) average. The Consumer Discretionary (+2.6%) and Financials (+2.6%) sectors are reporting the largest upside aggregate differences between actual sales and estimated sales. S&P 500 Reporting Earnings Growth This Week on Upside Surprises from Multiple Sectors S&P 500 Reporting Earnings Growth This Week on Upside Surprises from Multiple Sectors The blended earnings growth rate for the third quarter is 1.6% this week, which is above the blended earnings decline of -0.5% last week. Upside earnings surprises reported by companies in multiple sectors (led by the Industrials, Energy, Health Care, and Information Technology sectors) were mainly responsible for the increase in the overall earnings growth rate for the index during the past week. Real Estate Sector Has Seen Largest Increase in Earnings Growth since September 30 The blended earnings growth rate for Q of 1.6% is above the estimated decline of -2.2% at the end of the third quarter (September 30). All eleven sectors have recorded an increase in earnings growth since the end of the quarter due to upside earnings surprises, led by the Real Estate (to 16.0% from 2.0%), Financials (to 8.0% from 0.2%), and Utilities (to 11.0% from 5.3%) sectors. Earnings Growth: First Quarter of Year-Over-Year Earnings Growth (1.6%) Since Q The blended (combines actual results for companies that have reported and estimated results for companies yet to report) earnings growth rate for Q is 1.6%. If the index reports growth in earnings for the quarter, it will mark the first time the index has seen year-over-year growth in earnings since Q (0.5%). Eight sectors are reporting year-over-year growth in earnings, led by the Real Estate, Utilities, and Financials sectors. Three sectors are reporting a year-over-year decline in earnings, led by the Energy sector. Real Estate: Residential REITs Lead Growth The Real Estate sector is reporting the highest earnings growth of all eleven sectors at 16.0%. Five of the eight subindustries in this sector are reporting or are projected to report earnings growth for the quarter, led by the Residential REITs (89%), Health Care REITs (51%), and Specialized REITs (46%) sub-industries. On the other hand, the Office REITs (-65%) sub-industry is reporting the largest decline in earnings for the quarter. Utilities: Broad-Based Growth The Utilities sector is reporting the second highest earnings growth of all eleven sectors at 11.0%. All four industries in this sector are reporting or are projected to report earnings growth, led by the Independent Power and Renewable Electricity Producers industry at 39%. Within this industry, NRG Energy is projected to be the largest contributor to earnings growth for the sector. The mean EPS estimate for NRG Energy for Q is $0.76, compared to year-ago EPS of $0.19. Financials: Investment Banking & Brokerage Companies Lead Growth The Financials sector is reporting the third highest earnings growth of all eleven sectors at 8.0%. Nine of the 11 subindustries in this sector are reporting or are projected to report earnings growth for the quarter, led by the Investment Banking & Brokerage (73%) and Multi-line Insurance (48%) sub-industries. On the other hand, the Consumer Finance (-5%) and Diversified Financial Services (-4%) sub-industries are reporting the largest declines in earnings for the quarter. Energy: Largest Detractor to Earnings Growth in the S&P 500 The Energy sector is reporting the largest year-over-year decline in earnings of all eleven sectors at -64.6%. Five of the six sub-industries in this sector are reporting or are projected to report a year-over-year decrease in earnings: Oil & Gas Exploration & Production (N/A), Oil & Gas Drilling (-97%), Oil & Gas Equipment & Services (-85%), Oil & Gas Refining & Marketing (-66%), and Integrated Oil & Gas (-41%). The Oil & Gas Storage & Transportation (3%) subindustry is the only sub-industry in the sector reporting earnings growth for the quarter. This sector is also the largest detractor to earnings growth for the S&P 500 as a whole. If the Energy sector is excluded, the blended earnings growth rate for the S&P 500 would improve to 4.9% from 1.6%. FactSet.com Copyright 2016 FactSet Research Systems Inc. All rights reserved. 4

5 Revenues: First Quarter of Year-Over-Year Revenue Growth (2.7%) Since Q The blended revenue growth rate for Q is 2.7%. If the index reports growth in sales for the quarter, it will mark the first time the index has seen year-over-year growth in sales since Q (2.0%). Eight sectors are reporting year-over-year growth in revenues, led by the Consumer Discretionary, Real Estate, and Health Care sectors. Three sectors are reporting a year-over-year decline in revenues, led by the Energy sector. Consumer Discretionary: Auto Parts, Internet Retail, and Home Goods Lead Growth The Consumer Discretionary sector is reporting the highest revenue growth of all eleven sectors at 10.3%. Ten of the 12 industries in this sector are reporting or are projected to report sales growth for the quarter, led by the Auto Components (63%), Internet & Direct Marketing Retail (28%), and Household Durables (20%) industries. On the other hand, the Multiline Retail (-2%) and Diversified Consumer Services (-1%) industries are projected to report the largest declines in sales for the quarter. Real Estate: Real Estate Services & Specialized REITs Lead Growth The Real Estate sector is reporting the second highest revenue growth of all eleven sectors at 7.1%. Five of the eight sub-industries in this sector are reporting or are projected to report sales growth for the quarter, led by the Industrial REITs (21%), Real Estate Services (18%), and Specialized REITs (13%) sub-industries. On the other hand, the Office REITs (-6%) sub-industry is reporting the largest decline in sales for the quarter. Health Care: Broad-Based Growth The Health Care sector is reporting the third highest revenue growth of all eleven sectors at 6.8%. All six industries in this sector are reporting or are predicted to report sales growth for the quarter, led by the Health Care Technology (10%) industry. Energy: Largest Detractor to Revenue Growth in the S&P 500 The Energy sector is reporting the largest year-over-year decrease in sales for the quarter at -15.9%. Five of the six sub-industries in this sector are reporting or are predicted to report a year-over-year decrease in revenues: Oil & Gas Drilling (-45%), Oil & Gas Equipment & Services (-30%), Oil & Gas Exploration & Production (-21%), Oil & Gas Refining & Marketing (-15%), and Integrated Oil & Gas (-13%). The Oil & Gas Storage & Transportation (1%) subindustry is the only sub-industry in the sector reporting revenue growth for the quarter. This sector is also the largest detractor to sales growth for the S&P 500 as a whole. If the Energy sector is excluded, the blended revenue growth rate for the S&P 500 would improve to 4.6% from 2.7%. FactSet.com Copyright 2016 FactSet Research Systems Inc. All rights reserved. 5

6 Looking Ahead: Forward Estimates and Valuation Growth Expected to Continue in Q Analysts currently expect earnings and revenue growth to continue in Q For the quarter, analysts are projecting earnings growth of 4.6% and revenue growth of 5.2%. For all of 2016, analysts are projecting earnings growth of 0.2% and revenue growth of 2.2%. For all of 2017, analysts are projecting earnings growth of 12.0% and revenue growth of 5.8%. Guidance: Negative EPS Guidance (63%) for Q4 Below Average At this point in time, 57 companies in the index have issued EPS guidance for Q Of these 57 companies, 36 have issued negative EPS guidance and 21 have issued positive EPS guidance. The percentage of companies issuing negative EPS guidance is 63% (36 out of 57), which is below the 5-year average of 74%. In the Information Technology sector, more companies have issued positive EPS guidance (9) than negative EPS guidance (4). Valuation: Forward P/E Ratio is 16.4, above the 10-Year Average (14.3) The forward 12-month P/E ratio is This P/E ratio is above the 5-year average of 14.9, and above the 10-year average of However, it is below the forward 12-month P/E ratio of 16.8 recorded at the start of the fourth quarter (September 30). Since the start of the fourth quarter, the price of the index has decreased by 1.6%, while the forward 12-month EPS estimate has increased by 0.8%. At the sector level, the Energy (49.0) sector has the highest forward 12-month P/E ratio, while the Financials (12.3) sector has the lowest forward 12-month P/E ratio. Nine sectors have forward 12-month P/E ratios that are above their 10-year averages, led by the Energy (49.0 vs. 17.2) sector. The Telecom Services (12.6 vs. 14.6) is the only sector with a forward 12-month P/E ratio below the 10-year average. Historical averages are not available for the Real Estate sector. Companies Reporting Next Week: 134 During the upcoming week, 134 S&P 500 companies (including 1 Dow component) are scheduled to report results for the third quarter. FactSet.com Copyright 2016 FactSet Research Systems Inc. All rights reserved. 6

Q3 2016: Projected EPS Surprises (Sharp Estimates) FactSet.

Q4 2016: EPS Guidance EARNINGS INSIGHT October 28, 2016 FactSet.

Net Margins: Current & Historical EARNINGS INSIGHT October 28, 2016

Forward 12M Price / Earnings Ratio: Sector Level FactSet.

25 Important Notice The information contained in this report is provided as is and all representations, warranties, terms and conditions, oral or written, express or implied (by common law, statute or otherwise), in relation to the information are hereby excluded and disclaimed to the fullest extent permitted by law. In particular, FactSet, its affiliates and its suppliers disclaim implied warranties of merchantability and fitness for a particular purpose and make no warranty of accuracy, completeness or reliability of the information. This report is for informational purposes and does not constitute a solicitation or an offer to buy or sell any securities mentioned within it. The information in this report is not investment advice. FactSet, its affiliates and its suppliers assume no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this report. About FactSet FactSet is a leading provider of integrated financial information and analytical applications. More than 63,000 users stay ahead of global market trends, access extensive company and industry intelligence, and monitor performance with FactSet s desktop analytics, mobile applications, and comprehensive data feeds. The Company has been included in FORTUNE's Top 100 Best Companies to Work For, the United Kingdom s Great Places to Work and France s Best Workplaces. FactSet is listed on the New York Stock Exchange and NASDAQ (NYSE:FDS) (NASDAQ:FDS). Learn more at and follow us on Twitter: FactSet.com Copyright 2016 FactSet Research Systems Inc. All rights reserved. 25

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To receive this report via , please go to: EARNINGS INSIGHT John Butters, VP, Sr. Earnings Analyst jbutters@factset.com Media Questions/Requests media_request@factset.com S&P 500 October 14, 2016 Key Metrics Earnings Scorecard: With 7% of the companies