EC The Q3 2019 Earnings Season Gets Underway

The Q3 reporting season will really get underway when the big banks report results in mid-October, but the earnings season has actually started already with results from 5 S&P 500 members out. We have another 9 index members on deck to report results this week, including Nike (NKE - Free Report), ConAgra (CAG - Free Report), Micron (MU - Free Report) and others.

The 5 S&P 500 members that reported already and the 9 index members coming out with results this week 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 - Free Report) reports September-quarter results on October 15, we will have seen such Q3 results from almost two dozen S&P 500 members already.

The chart below shows the number of S&P 500 companies reporting weekly.

(Click on image to enlarge)

Expectations for 2019 Q3 & Beyond

It is way too early to start drawing conclusions from the few results that are out already, but it has been a weak start, with companies struggling to beat expectations. The chart below compares the proportion of these 5 index members that have beat EPS and revenue estimates with what we had seen from the same group in other recent periods.

(Click on image to enlarge)

There is no reason to think that this sub-par trend will persist as the reporting cycle really gets going, but it is a weak start.

For Q3 as a whole, total earnings for the index are expected to decline -4.8% from the same period last year on +4.2% higher revenues, with 12 of the 16 Zacks sectors expected to have lower earnings compared to the year-earlier period, including the Tech sector.

We will know what the final Q3 earnings growth pace turns out to be when all the results are in, but we know that they will be better than these expectations, likely close to the flat line that we saw in the first half of the year.

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 growing resort to tariffs are not helping matters either.

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