Alcoa’s (AA - Analyst Report) earnings release on April 8^th will put the spotlight on the Q1 earnings season. But trends in estimate revisions are setting up Q1 as a very weak reporting cycle. The magnitude of negative revisions that we saw for 2015 Q1 is the highest of any other recent quarter. As we show in one of the charts accompanying the video, total earnings for the S&P 500 that were expected to be up +5% in mid-December are now expected to be down -5.2% from the same period last year. 

Energy is obviously a big drag on the Q1 growth picture, as it was in the preceding quarter. Estimates of total earnings for the Energy sector have come down by almost one-half since the start of the quarter in early January, with the sector now expected to see earnings decline by -63% from the period last year on -35.2% lower revenues. Energy sector earnings were down -17.3% in 2014 Q4 on -13.5% lower revenues. 

But Energy is neither the sole drag on Q1 growth nor the primary driver of negative estimate revisions. As we show in one of the accompanying charts, the magnitude of negative revisions for the quarter is the highest of any other recent quarter even on an ex-Energy basis, with estimates for each of the 16 Zacks sectors coming down. The estimated growth rate for total S&P 500 earnings outside of the Energy sector has dropped from +9.6% in mid-December 2014 to the current +2.5% growth rate. 

Overall, total earnings for the index are expected to be down -5.3% from the same period last year on -3.9% lower revenues, with half of the 16 Zacks sectors expected to experience earnings decline from the same period last year. Medical and Finance are the only major sectors with strong positive earnings growth – Medical earnings are expected to be up +11.9% while Finance earnings are projected to be up +9.5%. We should keep in mind however that company each in both of these sectors are driving most of the growth. In case of the Medical sector, the one company is Gilead Sciences (GILD - Analyst Report) while easy comparisons for Bank of America (BAC - Analyst Report) are driving the Finance sector’s stronger-looking growth picture. Adjusting for these two companies, even Finance and Medical look a lot less impressive. 

Bottom line, the Q1 earnings season is shaping up to be very weak. Not only is the expected growth rate very low, but estimates of total earnings in the quarter are also the lowest of any other recent quarter.