S&P 500 Q4 Earnings Recap + 6 Stocks With Low China Exposure To Watch

In times of market turmoil, it’s tempting for traders to get caught up in the day-to-day headlines and take their eye off the proverbial ball.

Last week’s breathtaking -12% swoon in US indices provides a perfect case study: while we don’t want to downplay the massive human and economic cost of coronavirus, the related tumble in US equities has certainly provided bullish traders an opportunity to scoop up firms that, at least according to the most recent earnings reports, continue to increase profits while they’re “on sale.”

With 95% of the companies in the S&P 500 reporting results, the “blended” earnings growth rate (using companies that have reported and estimates for the 5% of companies that haven’t yet reported) is +0.9%, according to the earnings mavens at FactSet. This marks the first quarter of positive year-over-year earnings growth since Q4 2018 (note that the effects of the Trump Administration’s corporate tax cuts, which went into effect at the start of 2018, made annualized comparisons tough throughout last year).

More to the point, 71% of S&P 500 companies beat consensus analyst earnings estimates, roughly in-line with the 1- and 5-year averages, while 65% of firms beat revenue forecasts, well above the 1- and 5-year averages. Generally speaking, top-line revenues are more difficult to manipulate than earnings, so the stronger-than-expected revenue figures paint a bullish fundamental picture for US stocks heading into 2020. As the chart below shows, sales in the Communication Services and Health Care sectors were particularly strong relative to expectations, while the Utility sector reported generally disappointing revenues:

(Click on image to enlarge)

Source: FactSet

Of course, the stock market is a forward-looking animal, so traders will be keen to see if US companies can maintain the positive momentum amidst the economic disruptions stemming from the spread of coronavirus in Q1.

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