S&P 500 on pace to drop by nearly 33pc
The earnings reporting season for big U.S companies has nearly wrapped up, with businesses in the S&P 500 on track to report a sharp decline in their profits for the spring, but not as bad as Wall Street expected.
More than 93 percent of the earnings reports are in, and the index is on pace for a roughly 33 percent drop from the previous year.
Source: AP
https://www.thestandard.com.hk/breaking ... early-33pc
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Earnings (General News) 02 (Oct 16 - Dec 25)
Re: Earnings (General News)
by winston » Fri Aug 21, 2020 8:30 am
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Re: Earnings (General News)
by winston » Tue Oct 06, 2020 10:30 am
US 3Q Earnings
Third-quarter announcement season kicks off during the second full week of October and it is going to be absolutely stunning.
As a reminder, the second-quarter earnings season was impressive. According to FactSet, 84% of S&P 500 companies topped analysts’ earnings estimates and 65% beat revenue forecasts. It was the biggest quarter for earnings surprises since FactSet started tracking the data back in 2008.
Volatility hit the market in September, but the S&P 500 still gained 8.5% during the third quarter that ended Sept. 30 while the Dow rose 7.6%. The technology-centric Nasdaq climbed 11% in the third quarter and has increased 45% in the past six months, posting the index’s biggest two-quarter gain since 2000.
If the third quarter earnings reports follow suit — as I expect they will — we’re going to experience wave after wave of positive earnings surprises.
Of the 67 companies that have issued earnings guidance for the third quarter, only 22 have issued negative guidance.
The number issuing positive guidance, on the other hand, is on track to tie with the second quarter of 2010 and 2018 as the second highest number of S&P 500 companies issuing positive earnings guidance since FactSet started tracking the measure in 2006.
FactSet is expecting the S&P 500’s third-quarter earnings to decline by an average 21.8%. Third-quarter revenue is only forecast to dip an average 3.8%, and we can thank the weak dollar for that. Remember, a weak dollar creates windfall sales for big multinationals.
I should add that the analyst community has aggressively revised their earnings forecasts over the past three months —and the majority of these revisions were to the upside. This is the first time that analysts on average have increased their estimates since the second quarter of 2018.
Estimates are still cautious, which is setting the stage for more positive earnings surprises.
Source: Investor Place
Third-quarter announcement season kicks off during the second full week of October and it is going to be absolutely stunning.
As a reminder, the second-quarter earnings season was impressive. According to FactSet, 84% of S&P 500 companies topped analysts’ earnings estimates and 65% beat revenue forecasts. It was the biggest quarter for earnings surprises since FactSet started tracking the data back in 2008.
Volatility hit the market in September, but the S&P 500 still gained 8.5% during the third quarter that ended Sept. 30 while the Dow rose 7.6%. The technology-centric Nasdaq climbed 11% in the third quarter and has increased 45% in the past six months, posting the index’s biggest two-quarter gain since 2000.
If the third quarter earnings reports follow suit — as I expect they will — we’re going to experience wave after wave of positive earnings surprises.
Of the 67 companies that have issued earnings guidance for the third quarter, only 22 have issued negative guidance.
The number issuing positive guidance, on the other hand, is on track to tie with the second quarter of 2010 and 2018 as the second highest number of S&P 500 companies issuing positive earnings guidance since FactSet started tracking the measure in 2006.
FactSet is expecting the S&P 500’s third-quarter earnings to decline by an average 21.8%. Third-quarter revenue is only forecast to dip an average 3.8%, and we can thank the weak dollar for that. Remember, a weak dollar creates windfall sales for big multinationals.
I should add that the analyst community has aggressively revised their earnings forecasts over the past three months —and the majority of these revisions were to the upside. This is the first time that analysts on average have increased their estimates since the second quarter of 2018.
Estimates are still cautious, which is setting the stage for more positive earnings surprises.
Source: Investor Place
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Re: Earnings (General News)
by winston » Thu Oct 15, 2020 11:28 am
Third quarter earnings
Expectations aren't high.
S&P 500 companies are forecast to see a 21% drop in earnings for the quarter.
It is the largest decline since the Great Recession in 2009.
With the outlook so poor, that could lead to very large moves in stocks that issue upside surprises.
Source: Investor Place
Expectations aren't high.
S&P 500 companies are forecast to see a 21% drop in earnings for the quarter.
It is the largest decline since the Great Recession in 2009.
With the outlook so poor, that could lead to very large moves in stocks that issue upside surprises.
Source: Investor Place
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Re: Earnings (General News)
by winston » Tue Oct 20, 2020 11:21 am
US 3Q Earnings
For the third quarter, 86% of those that have reported have beaten earnings estimates—and 82% have beaten revenue estimates.
Positive surprises are great, but the earnings decline is running around 18%—that's aggregate earnings down 18% from the same period a year ago.
Of course, earnings can opportunistically be managed lower/weaker. And the pandemic environment offers an easy opportunity for companies to take their medicine now—to put all the bad news (write-offs, write-downs, divestitures, etc.) on the table to optimize earnings coming out of the economic downturn.
With that, what is maybe the most interesting number to watch in this earnings season is year-over-year revenue change.
On that note, despite the record economic contraction of the second quarter, the year-over-year third-quarter revenue decline (to this point in the reporting) is only 3%.
Source: Forbes
For the third quarter, 86% of those that have reported have beaten earnings estimates—and 82% have beaten revenue estimates.
Positive surprises are great, but the earnings decline is running around 18%—that's aggregate earnings down 18% from the same period a year ago.
Of course, earnings can opportunistically be managed lower/weaker. And the pandemic environment offers an easy opportunity for companies to take their medicine now—to put all the bad news (write-offs, write-downs, divestitures, etc.) on the table to optimize earnings coming out of the economic downturn.
With that, what is maybe the most interesting number to watch in this earnings season is year-over-year revenue change.
On that note, despite the record economic contraction of the second quarter, the year-over-year third-quarter revenue decline (to this point in the reporting) is only 3%.
Source: Forbes
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Re: Earnings (General News)
by behappyalways » Wed Nov 11, 2020 2:09 pm
Still ailing
USA Inc’s ponderous recovery
Beyond the frothy stockmarket and the tech boom, much of American business is still struggling
On the hustings, both Donald Trump and Joe Biden promised to revive America’s economy from its pandemic-induced funk. Doing so will require a turnaround for corporate America, which has suffered a savage downturn.
When the occupant of the White House starts his four year term in January, in what state will American business be?
Some recent vital signs may look promising. America’s economy expanded at a record pace of 33%, on an annualised basis, in the third quarter. Total profits for the big firms of the s&p 500 index have surpassed analysts’ expectations by roughly a fifth, with 85% beating forecasts for the quarter.
Michael Wilson of Morgan Stanley, a bank, calculates that revenues for the median s&p 500 firm rose by 1% year on year. Small wonder that the Conference Board, a research organisation, published a survey on October 20th finding that its measure of confidence of bosses at big companies has jumped to 64 from 45 in the previous quarter—a figure above 50 indicates more positive than negative responses.
Yet anyone tuning into big firms’ quarterly update calls with Wall Street investors could not help but pick up the tentative tone and frequent dour notes of executives. Visa, a payments company, for example, called the recovery “uneven”.
Caterpillar, a maker of industrial machinery, admitted it is “holding more inventory than we normally would” because of the uncertainties resulting from the pandemic. And a close analysis of the figures suggests that the corporate recovery is very patchy, with some industries and smaller firms still in big trouble.
Meanwhile, corporate balance-sheets are under strain, which could hold back investment and lead to an eventual rise in defaults.
America’s economic boom in the latest quarter would be impressive had it not come on the heels of a comparable decline in gdp in the previous three-month period. The economy remains 3.5% smaller than it was at the end of 2019, reckons the Conference Board, and it is not likely to return to its pre-pandemic level until the tail end of 2021 or possibly later (see chart).
As for the large proportion of companies where profits exceeded expectations this quarter, Tobias Levkovich of Citi, a bank, is unimpressed: “Beating lowered earnings expectations is not that great a feat.” It is now clear that analysts were too pessimistic when they pencilled in their forecasts earlier in the year.
He adds that many firms managed to improve profits not by boosting sales but by slashing their expenses. The business outlook remains “squishy”, he reckons, as “you can’t cost-cut your way to prosperity.”
The more you peer into the numbers, the more inconsistent the recovery looks. One source of differentiation is where a company’s customers are based. Jonathan Golub of Credit Suisse, another bank, estimates that the companies in the s&p 500 reported an aggregate revenue decline of 2.8% and a fall of 10.2% in profits in the third quarter compared with a year earlier.
But he estimates that at American firms focused on exports profits plunged by over 14%, whereas those companies more reliant on the domestic market suffered a drop of less than 9%.
Size is another lens which reveals the uneven recovery. Binky Chadha of Deutsche Bank argues that it is “a tale of two stockmarkets”. The market capitalisation of the five biggest tech giants (Facebook, Amazon, Apple, Microsoft and Alphabet) has fallen in recent weeks from its peak of roughly a quarter of the entire value of the s&p 500 index.
Even so, they have generated returns of 39% for shareholders this year and without them the 495 others have produced a return of -1%.
Small and medium-sized firms (smes) have been crushed. The proportion of them that are making losses—based on the Russell 2000, an index of smes—has declined a bit from its peak of above 40%, but it remains well above 30%.
smes are nearly four times as likely to be losing money as big firms, a far worse situation than during the recession of 2001 or the global financial crisis a decade ago.
The mood in the board rooms of small companies is foul. The latest survey of executives at smes, published by the Wall Street Journal and Vistage, an executive-coaching organisation, found sentiment “stalled in October 2020 due to increased concerns about an economic slowdown amid a resurgence in covid-19 infections.”
The gloomy outlook, the most pessimistic in six years, may be explained by the fact that 42% of small firms believe they will run out of cash in under six months.
If the inconsistency of the recovery is one worry, the other is the state of firms’ balance-sheets. Corporate debt was rising before the pandemic, and many firms have piled on more borrowings in order to cover the shortfall in revenue they have experienced this year. Edward Altman of nyu Stern School of Business is worried about what he calls “the enormous build-up of non-financial corporate debt.”
By his estimation, firms have issued more than $360bn in high-yield debt (ie, junk bonds) so far this year, surpassing the previous record of $345bn in all of 2012. With debt-earnings ratios reaching critical levels, and a resurgence in corporate defaults, Mr Altman reckons that 6.5% to 7% of junk bonds, by dollar value, will default in 2020.
His fears are echoed by s&p Global, a credit-rating agency. It calculates that the “distress ratio” (distressed credits are junk bonds with spreads of more than ten percentage points relative to us Treasuries) for American companies had come down to 9.5% in September from its peak of 36% in March but that it remains above pre-pandemic levels.
Corporate America already leads the world in the tally of corporate defaults this year, with 127 by the end of October. Nicole Serino of s&p Global notes that corporate credit quality is deteriorating, with the number of firms rated a lowly ccc+ or below now 50% higher than at the end of 2019. For such firms, she worries that “excess liquidity and low interest rates are only postponing the inevitable.”
With a large share of firms still making losses and given the weakening of balance-sheets it is far from clear that American business is in the clear. What happens next depends on three unknowns. One is the fallout from this week’s presidential vote.
A prolonged period of post-election uncertainty would weigh on the mood, notes Mr Levkovich. He points to the 11% fall in the s&p 500 index after the election in 2000 while legal wrangling decided the outcome of the contest for the presidency between George W. Bush and Al Gore.
Another unknown is the timing and size of the next package of fiscal stimulus from Congress, which at the moment is frozen by partisan gridlock in Washington, dc, and which could be limited if the Republicans keep firm control of the Senate.
This matters to companies because, as Mr Golub puts it, “the government has effectively said, ‘We do not want market forces to drive firms out of business right now and so we are going to backstop a large part of the economy.’”
Mr Wilson believes that the number of companies going bankrupt so far this year has been much lower than otherwise feared because of generous stimulus measures.
The biggest unknown, though, is the pandemic. Moody’s, a credit-rating agency, predicts that corporate-debt defaults will continue to rise until March 2021. The reason it gives is “economic recovery remains fragile amid risks of another pandemic resurgence leading to another round of countrywide lockdowns”.
That should serve as a sober reminder to the next president and corporate bosses alike that, despite a rebound, there may yet be difficult days ahead for usa Inc
Source: The Economist
USA Inc’s ponderous recovery
Beyond the frothy stockmarket and the tech boom, much of American business is still struggling
On the hustings, both Donald Trump and Joe Biden promised to revive America’s economy from its pandemic-induced funk. Doing so will require a turnaround for corporate America, which has suffered a savage downturn.
When the occupant of the White House starts his four year term in January, in what state will American business be?
Some recent vital signs may look promising. America’s economy expanded at a record pace of 33%, on an annualised basis, in the third quarter. Total profits for the big firms of the s&p 500 index have surpassed analysts’ expectations by roughly a fifth, with 85% beating forecasts for the quarter.
Michael Wilson of Morgan Stanley, a bank, calculates that revenues for the median s&p 500 firm rose by 1% year on year. Small wonder that the Conference Board, a research organisation, published a survey on October 20th finding that its measure of confidence of bosses at big companies has jumped to 64 from 45 in the previous quarter—a figure above 50 indicates more positive than negative responses.
Yet anyone tuning into big firms’ quarterly update calls with Wall Street investors could not help but pick up the tentative tone and frequent dour notes of executives. Visa, a payments company, for example, called the recovery “uneven”.
Caterpillar, a maker of industrial machinery, admitted it is “holding more inventory than we normally would” because of the uncertainties resulting from the pandemic. And a close analysis of the figures suggests that the corporate recovery is very patchy, with some industries and smaller firms still in big trouble.
Meanwhile, corporate balance-sheets are under strain, which could hold back investment and lead to an eventual rise in defaults.
America’s economic boom in the latest quarter would be impressive had it not come on the heels of a comparable decline in gdp in the previous three-month period. The economy remains 3.5% smaller than it was at the end of 2019, reckons the Conference Board, and it is not likely to return to its pre-pandemic level until the tail end of 2021 or possibly later (see chart).
As for the large proportion of companies where profits exceeded expectations this quarter, Tobias Levkovich of Citi, a bank, is unimpressed: “Beating lowered earnings expectations is not that great a feat.” It is now clear that analysts were too pessimistic when they pencilled in their forecasts earlier in the year.
He adds that many firms managed to improve profits not by boosting sales but by slashing their expenses. The business outlook remains “squishy”, he reckons, as “you can’t cost-cut your way to prosperity.”
The more you peer into the numbers, the more inconsistent the recovery looks. One source of differentiation is where a company’s customers are based. Jonathan Golub of Credit Suisse, another bank, estimates that the companies in the s&p 500 reported an aggregate revenue decline of 2.8% and a fall of 10.2% in profits in the third quarter compared with a year earlier.
But he estimates that at American firms focused on exports profits plunged by over 14%, whereas those companies more reliant on the domestic market suffered a drop of less than 9%.
Size is another lens which reveals the uneven recovery. Binky Chadha of Deutsche Bank argues that it is “a tale of two stockmarkets”. The market capitalisation of the five biggest tech giants (Facebook, Amazon, Apple, Microsoft and Alphabet) has fallen in recent weeks from its peak of roughly a quarter of the entire value of the s&p 500 index.
Even so, they have generated returns of 39% for shareholders this year and without them the 495 others have produced a return of -1%.
Small and medium-sized firms (smes) have been crushed. The proportion of them that are making losses—based on the Russell 2000, an index of smes—has declined a bit from its peak of above 40%, but it remains well above 30%.
smes are nearly four times as likely to be losing money as big firms, a far worse situation than during the recession of 2001 or the global financial crisis a decade ago.
The mood in the board rooms of small companies is foul. The latest survey of executives at smes, published by the Wall Street Journal and Vistage, an executive-coaching organisation, found sentiment “stalled in October 2020 due to increased concerns about an economic slowdown amid a resurgence in covid-19 infections.”
The gloomy outlook, the most pessimistic in six years, may be explained by the fact that 42% of small firms believe they will run out of cash in under six months.
If the inconsistency of the recovery is one worry, the other is the state of firms’ balance-sheets. Corporate debt was rising before the pandemic, and many firms have piled on more borrowings in order to cover the shortfall in revenue they have experienced this year. Edward Altman of nyu Stern School of Business is worried about what he calls “the enormous build-up of non-financial corporate debt.”
By his estimation, firms have issued more than $360bn in high-yield debt (ie, junk bonds) so far this year, surpassing the previous record of $345bn in all of 2012. With debt-earnings ratios reaching critical levels, and a resurgence in corporate defaults, Mr Altman reckons that 6.5% to 7% of junk bonds, by dollar value, will default in 2020.
His fears are echoed by s&p Global, a credit-rating agency. It calculates that the “distress ratio” (distressed credits are junk bonds with spreads of more than ten percentage points relative to us Treasuries) for American companies had come down to 9.5% in September from its peak of 36% in March but that it remains above pre-pandemic levels.
Corporate America already leads the world in the tally of corporate defaults this year, with 127 by the end of October. Nicole Serino of s&p Global notes that corporate credit quality is deteriorating, with the number of firms rated a lowly ccc+ or below now 50% higher than at the end of 2019. For such firms, she worries that “excess liquidity and low interest rates are only postponing the inevitable.”
With a large share of firms still making losses and given the weakening of balance-sheets it is far from clear that American business is in the clear. What happens next depends on three unknowns. One is the fallout from this week’s presidential vote.
A prolonged period of post-election uncertainty would weigh on the mood, notes Mr Levkovich. He points to the 11% fall in the s&p 500 index after the election in 2000 while legal wrangling decided the outcome of the contest for the presidency between George W. Bush and Al Gore.
Another unknown is the timing and size of the next package of fiscal stimulus from Congress, which at the moment is frozen by partisan gridlock in Washington, dc, and which could be limited if the Republicans keep firm control of the Senate.
This matters to companies because, as Mr Golub puts it, “the government has effectively said, ‘We do not want market forces to drive firms out of business right now and so we are going to backstop a large part of the economy.’”
Mr Wilson believes that the number of companies going bankrupt so far this year has been much lower than otherwise feared because of generous stimulus measures.
The biggest unknown, though, is the pandemic. Moody’s, a credit-rating agency, predicts that corporate-debt defaults will continue to rise until March 2021. The reason it gives is “economic recovery remains fragile amid risks of another pandemic resurgence leading to another round of countrywide lockdowns”.
That should serve as a sober reminder to the next president and corporate bosses alike that, despite a rebound, there may yet be difficult days ahead for usa Inc
Source: The Economist
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Re: Earnings (General News)
by winston » Mon Jan 11, 2021 1:58 pm
Investors look to upcoming U.S. earnings for a view into 2021
by Caroline Valetkevitch
Source: Reuters
https://finance.yahoo.com/news/investor ... 36814.html
by Caroline Valetkevitch
Earnings for S&P 500 companies are expected to have dropped 9.8% in the fourth quarter from a year ago.
But earnings are expected to rebound this year, with a gain of 16.4% projected for the first quarter.
The S&P 500 is trading at 22.7 times forward earnings, well above the long-term average of about 15.
Source: Reuters
https://finance.yahoo.com/news/investor ... 36814.html
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Re: Earnings (General News)
by winston » Fri Jan 22, 2021 1:41 pm
Earnings at S&P 500 companies are expected to rise by 24% in 2021 after falling 15% in 2020, according to Refinitiv data as of Jan. 15
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Re: Earnings (General News)
by winston » Sun Jan 31, 2021 9:40 am
According to FactSet, 86% of the S&P 500 companies that have released results so far have topped analysts’ earnings estimates and 82% have beat sales forecasts.
In fact, the average earnings decline for the S&P 500 is now expected to be about 4.7%, which favorably compares to previous estimates for a 9.2% decline.
Source: Market 360
In fact, the average earnings decline for the S&P 500 is now expected to be about 4.7%, which favorably compares to previous estimates for a 9.2% decline.
Source: Market 360
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Re: Earnings (General News) 02 (Oct 16 - Dec 22)
by winston » Thu Feb 11, 2021 7:59 am
59% of companies have reported (as of last Friday).
Of them, 81% of S&P 500 companies have reported a positive earnings-per-share (EPS) surprise, and 79% have reported a positive revenue surprise.
Source: Investor Place
Of them, 81% of S&P 500 companies have reported a positive earnings-per-share (EPS) surprise, and 79% have reported a positive revenue surprise.
Source: Investor Place
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Re: Earnings (General News) 02 (Oct 16 - Dec 22)
by winston » Wed Mar 03, 2021 7:22 am
4Q Earnings
The fourth quarter has already delivered big positive surprises.
Wall Street was looking for an earnings decline of 9% (compared to fourth-quarter 2019). We're nearly through all the reports, and earnings grew by 4% in the fourth quarter.
With this, the Wall Street earnings estimates for 2021 have been dialed UP. But these numbers will still be crushed.
For the first quarter, they're looking for earnings growth of 21%. For the second quarter, growth of 50%. That sounds like a lot.
Source: Forbes
The fourth quarter has already delivered big positive surprises.
Wall Street was looking for an earnings decline of 9% (compared to fourth-quarter 2019). We're nearly through all the reports, and earnings grew by 4% in the fourth quarter.
With this, the Wall Street earnings estimates for 2021 have been dialed UP. But these numbers will still be crushed.
For the first quarter, they're looking for earnings growth of 21%. For the second quarter, growth of 50%. That sounds like a lot.
Source: Forbes
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