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S&P 500 Earnings Season Update: February 7, 2020

Written by John Butters | Feb 7, 2020

To date, 64% of the companies in the S&P 500 have reported actual results for Q4 2019. In terms of earnings, the percentage of companies reporting actual EPS above estimates (71%) is below the five-year average. In aggregate, companies are reporting earnings that are 4.6% above the estimates, which is also below the five-year average. In terms of sales, the percentage of companies (67%) reporting actual sales above estimates is above the five-year average. In aggregate, companies are reporting sales that are 0.7% 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 growth rate for the fourth quarter is 0.7%, which is above the earnings decline of -0.5% last week. Positive earnings surprises recorded by companies in the Communication Services sector were mainly responsible for the increase in the overall earnings growth rate during the week. If 0.7% is the actual growth rate for the quarter, it will mark the first time the index has reported year-over-year growth in earnings since Q4 2018 (13.3%). Seven sectors are reporting year-over-year growth in earnings, led by the Utilities and Communication Services sectors. Four sectors are reporting a year-over-year decline in earnings, led by the Energy sector.

The blended revenue growth rate for the fourth quarter is 3.5%, which is above the revenue growth rate of 3.3% last week. Positive revenue surprises reported by companies in the Financials and Health Care sectors were mainly responsible for the increase in the overall revenue growth rate during the week. Eight sectors are reporting year-over-year growth in revenues, led by the Health Care sector. Three sectors are reporting a year-over-year decline in revenues, led by the Materials sector.

Looking ahead, analysts see earnings growth of 2.5% to 5% for Q1 2020 and Q2 2020.

The forward 12-month P/E ratio is 18.8, which is above the five-year average and above the 10-year average.

During the upcoming week, 65 S&P 500 companies (including one Dow 30 component) are scheduled to report results for the fourth quarter.