Earnings (General News) 02 (Oct 16 - Dec 25)

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Banks are facing huge credit losses as their customers suffer through the coronavirus pandemic, S&P warns
https://www.marketwatch.com/story/banks ... yptr=yahoo

[winston]

US 1Q Earnings

Now, earnings season is starting to wind down.

According to FactSet, approximately 86% of S&P 500 companies have announced results already.

S&P 500 companies are averaging a 13.6% drop in first-quarter earnings and 0.6% revenue growth.

Looking forward, second-quarter earnings results will not be nearly as good. A lot of businesses have been hit hard by the coronavirus pandemic, and that will be very apparent in second-quarter earnings results.

According to FactSet, second-quarter earnings are now expected to decline 40.6% year-over-year ...

Source: Investor Place

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Corporate profits drop in first quarter by most since 2008 Great Recession
https://www.marketwatch.com/story/corpo ... ck_seemore

[winston]

A second-quarter earnings preview by the numbers

From FactSet:

Earnings Growth: For Q2 2020, the estimated earnings decline for the S&P 500 is -43.8%.

If -43.8% is the actual decline for the quarter, it will mark the largest year-over-year decline in earnings reported by the index since Q4 2008 (-69.1%).

Valuation: The forward 12-month P/E ratio for the S&P 500 is 21.9.

This P/E ratio is above the 5-year average (16.9) and above the 10-year average (15.2).

So, we have a huge expected earnings decline coupled with a valuation that towers above five and ten-year averages.

This relationship isn't stable.

Source: Investor Place

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Scott Minerd in his latest interview is expecting S&P earnings of $80 to $100 per share or PE of above 30 for S&P.

[winston]

Get ready for the ugliest earnings season since the financial crisis

by Sam Ro

Analysts expect a sharp drop in Q2 earnings and the margin of error is high

"The estimated (year-over-year) earnings decline for Q2 2020 is -43.8%, which is below the 5-year average earnings growth rate of 5.5%,” Factset’s John Butters wrote.

“If -43.8% is the actual decline for the quarter, it will mark the largest year-over-year decline in earnings for the index since Q4 2008 (-69.1%).”

“All eleven sectors are projected to report a year-over-year decline in earnings, led by the Energy, Consumer Discretionary, Industrials, and Financials sectors,” Butters added.

Revenue, a better reflection of the demand and pricing environment, is estimated to have declined by 11.1% during the period.

Source: Yahoo Finance

https://finance.yahoo.com/news/earnings ... 43074.html

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“Biden will ensure that corporate America finally pays their fair share in taxes, puts their workers and communities first rather than their shareholders, and respects their workers’ power and voice in the workplace,” a Biden campaign email memo wrote Thursday.


“He will pay for the ongoing costs of the plan by reversing some of Trump’s tax cuts for corporations and imposing common-sense tax reforms that finally make sure the wealthiest Americans pay their fair share,” the memo outlined in bolded font.


Joe Biden's tax plan may wallop the stock market — here's one disturbing estimate
https://finance.yahoo.com/news/joe-bide ... 51982.html

[behappyalways]

S&P 500 earnings set to plunge as the coronavirus batters all sectors — with Wall Street counting on a bounce that may not come
https://www.marketwatch.com/story/sp-50 ... ck_seemore

[winston]

Profits for the companies in the S&P 500 plunged nearly 34% in the second quarter

That was the worst drop in five years.

And sales fell almost 9%, the biggest decline in nearly four years.

More pain ahead: Earnings for the S&P 500 are now expected to fall nearly 19% this year, compared to an anticipated drop of just 1.2% back in March.

Add all this up and you have a market that appears to be overheated, according to Stifel head of institutional equity strategy Barry Bannister. He wrote in a recent report that the S&P 500 may be as much as 10% overvalued right now.

Bannister worries that investors are underestimating the risk of another surge in coronavirus cases leading to more damage to the job market and earnings growth later this year. He also believes 2021 earnings estimates are too high and will need to be revised downward.

For now, tech stocks like Apple, Amazon and Microsoft have continued to propel the market higher thanks to strong earnings. But that may not last forever. And even quality companies can become too expensive.

"Valuations for the S&P 500 have been keeping us up at night," warned RBC Capital Markets head of US equity strategy Lori Calvasina in a report, adding that the recent run for tech stocks is reminiscent of the dot-com bubble in the Nasdaq 20 years ago.

Source: CNN

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Corporate Taxes
The Tax Cuts and Jobs Act reduced the corporate tax rate to 21 percent, from 35 percent.
Biden wouldn’t restore the rate all the way back to its former level, instead raising it to 28 percent.
He has proposed creating a minimum tax on corporations with at least $100 million in book profits, which means corporations would pay either their regular corporate income tax or a 15 percent minimum tax – whichever is greater.

Joe Biden's 2020 tax plan: The key points
https://finance.yahoo.com/news/joe-bide ... 21635.html