EC Looking Ahead To The Q3 2019 Earnings Season

It is too early for many to start talking about the 2019 Q3 earnings season, as we are almost a month away from the big banks (unofficially) kicking off the latest reporting cycle. It is only in the run up to these bank releases that everyone starts paying attention to the start of another earnings season. Unfortunately for us, we don’t have the luxury to wait that long as we are responsible for maintaining the ‘books’ on every earnings season.

From our standpoint, the 2019 Q3 earnings season got underway when Oracle (ORCL) released its August quarter results a day ahead of schedule on September 11. We have an additional four S&P 500 members on deck to report results this week. These include FedEx (FDX) and Adobe Systems (ADBE) on Tuesday, General Mills (GIS) on Wednesday and Darden Restaurants (DRI) on Thursday.

All of these companies have fiscal quarters ending in August, which we count as part of our September quarter tally. The fact is that by the time JPMorgan (JPM) reports September-quarter results on October 15, we will have seen such Q3 results from almost two dozen S&P 500 members already.

Expectations for 2019 Q3 & Beyond

Tough comparisons to last year when growth was boosted by the tax cut legislation were all along expected to weigh on earnings growth in 2019. Moderating U.S. economic growth and notable slowdowns in other major global economic regions are having a further negative impact. Uncertainty about the global trade regime and a growing resort to tariffs are not helping matters either.

As a result, earnings were essentially flat in the first half of 2019 and no significant improvement is expected in the growth trajectory in the September quarter either. While Q3 earnings growth is expected to be negative, current estimates indicate a modestly positive growth rate in the December quarter. History tells us that even that modestly positive growth rate in Q4 will likely turn negative in the coming days as estimates for that period come down as companies report Q3 results.

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InstaSalary 9 months ago Member's comment

very good article