Stock Market-Everything You Need To Know Next Week (Earnings Season)

Stock Market-Everything You Need To Know Next Week (Earnings Season). The stock markets earnings season kicks off next week with the big banks JPM, WFC, USB, C, BAC all reporting earnings. Here are the forecasts and earnings estimates for these companies.

Earnings Growth: For Q1 2020, the estimated earnings decline for the S&P 500 is -10.0%. If -10.0% is the actual decline for the quarter, it will mark the largest year-over-year decline in earnings reported by the index since Q3 2009 (-15.7%). Earnings Revisions: On December 31, the estimated earnings growth rate for Q1 2020 was 4.3%. All eleven sectors have lower growth rates today (compared to December 31) due to downward revisions to EPS estimates. Earnings Guidance: For Q1 2020, 72 S&P 500 companies have issued negative EPS guidance and 32 S&P 500 companies have issued positive EPS guidance. Valuation: The forward 12-month P/E ratio for the S&P 500 is 17.3. This P/E ratio is above the 5-year average (16.7) and above the 10-year average (15.0). Earnings Scorecard: For Q1 2020 (with 21 companies in the S&P 500 reporting actual results), 16 S&P 500 companies have reported a positive EPS surprise and 15 S&P 500 companies have reported a positive revenue surprise.

Q1 Earnings Season: By The Numbers Overview In terms of estimate revisions for companies in the S&P 500, analysts made larger cuts than average to earnings estimates for Q1 2020. On a per-share basis, estimated earnings for the first quarter decreased by 9.0% from December 31 to March 31. This percentage decline was larger than the 5-year average (-3.2%), the 10-year average (-3.2%), and the 15-year average (-4.5%) for a quarter. However, a slightly smaller percentage of S&P 500 companies have lowered the bar for earnings for Q1 2020 relative to recent averages. Of the 104 companies that have issued EPS guidance for the first quarter, 72 have issued negative EPS guidance and 32 have issued positive EPS guidance. The percentage of companies issuing negative EPS guidance is 69% (72 out of 104), which is slightly below the 5-year average of 70%. Because of the net downward revisions to earnings estimates, the estimated (year-over-year) earnings decline for Q1 2020 is -10.0% today compared to the estimated (year-over-year) earnings growth rate of 4.3% on December 31. If -10.0% is the actual decline for the quarter, it will mark the largest year-over-year decline in earnings for the index since Q3 2009 (-15.7%). It will also mark the fourth time in the past five quarters in which the index has reported a year-over-year decline in earnings. Six sectors are predicted to report year-over-year growth in earnings, led by the Communication Services sectors. Five sectors are projected to report a year-over-year decline in earnings: Energy, Consumer Discretionary, Industrials, Materials, and Financials. Because of the net downward revisions to revenue estimates, the estimated (year-over-year) revenue growth rate for Q1 2020 is 1.0% today compared to the estimated (year-over-year) revenue growth rate of 4.8% on December 31. If 1.0% is the actual growth rate for the quarter, it will mark the lowest year-over-year growth in revenue for the index since Q2 2016 (-0.2%). Seven sectors are projected to report year-over-year growth in revenues, led by the Communication Services sector. Four sectors are predicted to report a year-over-year decline in revenues, led by the Materials and Energy sectors. Looking at future quarters, analysts predict a decline in earnings in the second quarter (-20.0%), third quarter (-8.5%), and fourth quarter (-0.9%) of 2020. The forward 12-month P/E ratio is 17.3, which is above the 5-year average and above the 10-year average. During the upcoming week, 40 S&P 500 companies (including four Dow 30 components) are scheduled to report results for the first quarter.

https://www.factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_040920.pdf

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