EC Coronavirus Starting To Weigh On 2020 Q1 Earnings Estimates

Including all of this morning's reports, we now have Q4 earnings reports from 305 S&P 500 members or 61% of the index's total membership. Total earnings for these 305 index members are up +0.5% from the same period last year on +4.1% higher revenues, with 71.8% beating EPS estimates and 67.5% beating revenue estimates.

This is better performance than we have seen from this same group of companies in the recent past, even though earnings growth remains anemic and a lower proportion of companies are beating EPS estimates. 

Looking at Q4 as a whole, combining the actual results that have come out with estimates for the still-to-come reports, total earnings are now expected to be up +0.5% on +4.2% higher revenues.

2020 Q1 Estimates Coming Down

Estimates for the current period (2020 Q1) have started coming down in a notable way over the last few days, with the Coronavirus impact a big driver for the estimate cuts. S&P 500 earnings in 2020 Q1 are now expected to be up +1.7%, sharply down from +3.4% last week.

Given the evolving nature of this headwind, it is reasonable to expect that 2020 Q1 estimates will come down further in the coming days.

Exxon Mobil shares have lagged the peer group lately, but the Zacks analyst likes the company for its bellwether status in the energy space and optimal integrated capital structure that has helped it come up with industry-leading returns.

The company owns some of the most prolific upstream assets globally, with a number of major projects slated to come online over the next few years. Notably, ExxonMobil has made 16 oil discoveries in offshore Guyana and estimates 750,000 barrels of oil production per day from the region by 2025.

However, the company’s downstream and chemical businesses significantly underperformed in 2019, resulting in lower-than-expected earnings. The units are unlikely to recover in the coming quarters owing to scheduled maintenance activities. As such, the stock warrants a cautious stance.

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