EC The Market's Worst Days Are Behind Us

Each of the four index members that have reported already mentioned the virus outbreak in their releases, with Costco (COST - Free Report) reporting a +12.1% same-store sales growth in February as nervous shoppers stocked up on essential supplies. But for most other companies, the pandemic has undoubtedly been a negative development whose full impact they are struggling to quantify.

The chart below shows how estimates for 2020 Q1 have evolved since the quarter got underway.

(Click on image to enlarge)

The pace of estimate cuts has accelerated in recent days, with the magnitude of cuts to Q1 estimates now larger than any other recent comparable quarter.

Estimates for 2020 Q2 have been coming down as well and now remain in negative territory, as the highlighted portion of the chart below shows.

(Click on image to enlarge)

As you can see above, consensus estimates show growth resuming in the back half of the year. But that view likely reflects the hope that the pandemic and its associated effects get under control in the coming months. Hard to tell at this stage as to how reasonable or otherwise this expectation.

The chart below puts earnings and revenue growth expectations for full-year 2020 in the context of where growth has been in recent years and what is expected next year.

(Click on image to enlarge)

The ongoing market sell-off shows there isn’t a lot of confidence in these consensus expectations. That will likely change only once visibility on containment of the pandemic improves, which will enable companies to get a handle on the full extent of their exposure and the pandemic’s macroeconomic impact.

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