EC Spotlight On Retail Sector Earnings

The Revisions Trend

Current period estimates are coming down, with the Coronavirus outbreak adding to the typical negative revision that would take place anyway, as the chart below shows.

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It is totally normal for current-period estimates to be coming down as companies release their quarterly results and the magnitude of negative revisions to Q1 estimates still compares favorably to historical periods. But the additional factor this time around is the Coronavirus outbreak that has clear negative earnings implications, as many companies like Apple (AAPL - Free Report), Nvidia (NVDA - Free Report), Starbucks (SBUX - Free Report), and others have publicly acknowledged. The full extent of the virus outbreak will only become clearer over time. We don’t know at this stage whether the outbreak’s negative impact will be a one-quarter phenomenon or will it seep into the following periods as well.

The chart below shows Q4 earnings and revenue growth expectations contrasted with what is expected in the following four quarters and actual results in the preceding 4 quarters. As you can see, the growth pace is expected to start improving from next quarter onwards.

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