S&P 500 Earnings Season Update: April 24, 2020

To date, 24% of the companies in the S&P 500 have reported actual results for Q1 2020. In terms of earnings, the percentage of companies reporting actual EPS above estimates (60%) is below the five-year average. In aggregate, companies are reporting earnings that are 5.1% below the estimates, which is also below the five-year average. In terms of sales, the percentage of companies (60%) reporting actual sales above estimates is above the five-year average. In aggregate, companies are reporting sales that are 0.5% above estimates, which is below the five-year average.

The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings decline for the first quarter is -15.8%, which is larger than the earnings decline of -14.8% last week. Negative earnings surprises reported by companies in the Financials sector were mainly responsible for the increase in the overall earnings decline during the week. If -15.8% is the actual decline for the quarter, it will mark the largest year-over-year decline in earnings for the index since Q2 2009 (-26.9%). It will also mark the fourth time in the past five quarters in which the index has reported a year-over-year decline in earnings. Six sectors are reporting year-over-year growth in earnings, led by the Communication Services sector. Five sectors are reporting a year-over-year decline in earnings: Energy, Consumer Discretionary, Financials, Industrials, and Materials.

The blended revenue growth rate for the first quarter is 0.1%, which is below the revenue growth rate of 0.4% last week. Downward revisions to revenue estimates and negative revenue surprises for companies in multiple sectors (led by the Energy, Communication Services, and Consumer Discretionary sectors) were mainly responsible for the decrease in the overall revenue growth rate during the week. If 0.1% is the actual growth rate for the quarter, it will mark the lowest year-over-year growth in revenue for the index since Q2 2016 (-0.2%). Seven sectors are reporting year-over-year growth in revenues, led by the Health Care and Communication Services sectors. Four sectors are reporting a year-over-year decline in revenues, led by the Materials and Energy sectors.

Looking at future quarters, analysts predict a (year-over-year) decline in earnings in the second quarter (-31.9%), third quarter (-16.9%), and fourth quarter (-7.4%) of 2020.

The forward 12-month P/E ratio is 19.1, which is above the five-year average and above the 10-year average.

During the upcoming week, 172 S&P 500 companies (including 12 Dow 30 components) are scheduled to report results for the first quarter.