S&P 500 earnings to decline for the third quarter: Estimize

Earnings season for the third quarter of 2015 unofficially kicks off on Thursday when Alcoa (AA) reports. Similar to the last two quarters, we head into the season with negative top and bottom-line growth expectations for the S&P 500.

Currently the Estimize community is expecting S&P 500 earnings per share (EPS) to decrease 2.2% for the quarter, and revenues to decline 1.7%.

Many of the same concerns from the first half of the year still persist. Weakness in the energy sector remains, with profits anticipated to decline 66% and revenues down 30% year-over-year (YoY). It was initially thought that Q3 2015 would be the first quarter of even year-over-year comparisons.

Oil prices initially dropped during the third quarter of 2014 in response to the stronger dollar, therefore making Q3 2015 the first quarter with level comparisons. However, oil prices dropped even further in the third quarter, prolonging the difficult YoY comparisons. Brent Crude Oil is down 22% since the end of Q2, and down an even steeper 50% YoY. Ex-energy, S&P 500 growth would be closer to 5%.

Of course, lower oil prices are great for some other sectors such as consumer discretionary, that sector anticipated to post EPS growth of 7.3%, but low revenue growth of 1.4%. Automobiles are leading the sector higher with U.S. auto sales on a tear this summer.

The September reading for Motor Vehicle sales clocked in at a whopping 18.2M, the strongest reading since July 2005. A lot of that strength came from truck sales, as falling gasoline prices have made consumers less cautious about purchasing gas guzzlers.

Get the Latest Market Data and News with the Yahoo Finance App

Other industry winners include internet retail and multi-line retail.

However, the big winner again this season is health care, expecting profit growth of 11.2% and revenues of 8.4%. Health care technology is anticipated to post the highest EPS growth of 29.5%, with even higher revenues of 40.5%, although the industry only contains Cerner.

As usual, Biotech garners most of the attention in this sector, and is anticipated to have the second best top and bottom-line growth numbers. Biotech darling, Gilead Sciences (GILD), is estimated to continue its run of robust results due to continued strength of their popular Hepatitis C drugs Slovaldi and Harvoni. Despite this, according to early reports, sales of those drugs began to slow last month. The steep prices of the medications have been an issue in the past, with Gilead having to make several price concessions in order for insurers to carry Slovaldi and Harvoni as their primary Hep C drugs.

Another issue is the curative nature of the drugs, Gilead is already researching other franchises to develop. The season starts out out light, with only five S&P 500 companies reporting this week, including Pepsico (PEP), Yum! Brands (YUM), Monsanto (MON), Constellation Brands (STZ) and Alcoa.

More on Yahoo Finance

Jobs where students command 6-figure salaries months ahead of graduation

Chevron stands to win in liquefied natural gas market: energy analyst

Unemployment rate to decline but Fed liftoff to hold until March: RBS