EC Making Sense Of The Earnings Picture

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What this chart is showing is that total earnings (or aggregate net income) for the 445 S&P 500 members are down -34.8% on -10.9% lower revenues. To round out this scorecard, 80.2% of these 445 index members have beaten consensus EPS estimates and the corresponding revenue beats percentage is 63.1%, with a blended beats percentage of 56.4%.

The third chart shows how estimates for the current period (2020 Q3) has evolved since the Q2 earnings season got underway.

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As you can see above, Q3 earnings for the S&P 500 index are currently expected to decline -23.9% from the same period last year. But the growth picture has been steadily improving since the start of July. We see a similar trend in place for 2020 Q4 and full-year 2020 estimates as well.

This is a notable improvement in the overall earnings picture since the start of the pandemic.

The fourth chart below takes a big-picture view of the quarters, showing Q2 earnings and revenue growth in the context of what was actually achieved in the last few quarters and what is expected in the coming periods. Please note that the Q2 earnings and revenue growth figures represent the blended numbers for the quarter, not just the reports that have come out already.

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The fifth chart below presents the big-picture view on an annual basis. As you can see below, 2020 earnings and revenues are expected to be down -21.5% and -5%, respectively.

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As would be expected, 2020 estimates came down as the pandemic unfolded, with the current -21.5% decline down from +7.9% growth at the start of the year. But as mentioned earlier in the context of 2020 Q3 estimates, the revisions trend lately has been positive, as the chart below shows.

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Comments

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William K. 2 months ago Member's comment

Thanks for the article. It shows WHAT has happened although a bit light on the mechanism of why. But that is OK because of all the unpredictable unknowns.

Carol D. Richards 2 months ago Member's comment

What do you think is the "why?"

William K. 2 months ago Member's comment

perhaps what is happening is that earnings are being made but they are not bigger and better than before. So i just might be, possibly, that a company can have quite good earnings without them being any greater than previous earnings.

These ARE uncertain times and it does happen that as plague cases areas and states my once again be "closed", I realize that the whole concept of existence without growth is totally foreign to many. but certainly it can happen. And in a system without inflation being fed by those with very vested interests, which has been the case since exiting the gold standard.