FactSet Research : S&P 500 Companies with More Global Exposure Reporting Higher Earnings Growth in Q2

S&P 500 Companies with More Global Exposure Reporting Higher Earnings Growth in Q2 Earnings

By John Butters| July 25, 2022

Given the military conflict in Ukraine and the stronger U.S. dollar, do S&P 500 companies with more international revenue exposure have lower earnings and revenue growth rates for Q2 2022 compared to S&P 500 companies with more domestic revenue exposure?

Comparing Aggregate Earnings and Revenue Growth Rates Based on International Revenue Exposure

The answer is no. FactSet Geographic Revenue Exposure data (based on the most recently reported fiscal year data for each company in the index) was used to answer this question. For this analysis, the index was divided into two groups: companies that generate more than 50% of sales inside the U.S. (more domestic exposure) and companies that generate more than 50% of sales outside the U.S. (more international exposure). Aggregate earnings and revenue growth rates were then calculated based on these two groups.

The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings growth rate for the S&P 500 for Q2 2022 is 4.8%. For companies that generate more than 50% of sales inside the U.S., the blended earnings growth rate is 1.2%. For companies that generate more than 50% of sales outside the U.S., the blended earnings growth rate is 10.2%.

The blended revenue growth rate for the S&P 500 for Q2 2022 is 10.9%. For companies that generate more than 50% of sales inside the U.S., the blended revenue growth rate is 9.4%. For companies that generate more than 50% of sales outside the U.S., the blended revenue growth rate is 14.6%.

What is Driving the Outperformance of S&P 500 Companies with Higher International Revenue Exposure?

At the company level, Exxon Mobil and Chevron are the largest contributors to earnings growth and revenue growth for S&P 500 companies with more international revenue exposure. Exxon Mobil generates 62% of revenues outside the United States, while Chevron generates 56% of revenues outside the United States. If these two companies were excluded, the (blended) earnings growth rate for S&P 500 companies that generate more than 50% of revenues outside the U.S. would fall to 0.5% from 10.2%, while the (blended) revenue growth rate for S&P 500 companies that generate more than 50% of revenues outside the U.S. would fall to 9.1% from 14.6%.

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