At first glance it appears telecom service companies (XTL) will post stellar earnings growth in the fourth quarter of 34%. That’s the best of all ten sectors in the S&P 500 (^GSPC) according to FactSet senior analyst, John Butters. However the numbers are not as good as they look. “It is important to note most of that growth is coming from one company, Verizon (VZ)," cautions Butters. "If we remove Verizon from the telecom services sector that 34% growth rate drops down to 9%.” Investors may already be clued in. The iShares US Telecommunications ETF (IYZ) ended 2014 little changed as the S&P 500 advanced 15%.

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Health care stocks are a different story. The Health Care Select Sector SPDR ETF (XLV) gained an impressive 25% last year and fourth quarter earnings are expected to jump 17%, which would be the second highest growth rate. The problem is health care is as skewed as telecom. “One company is having an outsized influence on the growth rate and that’s Gilead Sciences (GILD)," says Butters who also notes "Removing Gilead Sciences that growth rate of 17% gets cut in half." Gilead has seen its shares drop 11% since mid-December after the company lost a lucrative Hepatitis C drug contract with Express Scripts (ESRX) to rival AbbVie (ABBV).  

Related: 4Q profit estimates getting chopped and it's not just energy companies

As for overall fourth quarter earnings growth, analysts now expect just 2.6% down from an earlier target of 8.4%. The big problem according to Butters; energy. “This is a sector we have seen historical cuts in estimates,” energy earnings are forecast to decline 17% versus growth of 7% a year ago. “Alot of that weakness, again across the board, but really driven by the large integrated oil companies Exxon Mobil (XOM) and Chevron (CVX).”  Both were among the Dogs of the Dow (^DJI) in 2014.

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