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S&P 500 Earnings Season Update: July 31, 2020

Earnings

By John Butters  |  July 31, 2020

To date, 63% of the companies in the S&P 500 have reported actual results for Q2 2020. In terms of earnings, the percentage of companies reporting actual EPS above estimates (84%) is above the five-year average. If 84% is the final percentage for the quarter, it will mark the highest percentage of S&P 500 companies reporting a positive EPS surprise since FactSet began tracking this metric in 2008. In aggregate, companies are reporting earnings that are 21.8% above the estimates, which is also above the five-year average. If 21.8% is the final percentage for the quarter, it will mark the largest earnings surprise percentage reported by the index since FactSet began tracking this metric in 2008.

S&P 500 Earnings Above In Line Below Estimates Q2 2020

In terms of sales, the percentage of companies reporting actual sales above estimates (69%) is above the five-year average. In aggregate, companies are reporting sales that are 2.4% above estimates, which is also above the five-year average. If 2.4% is the final percentage for the quarter, it will mark the largest revenue surprise percentage reported by the index since FactSet began tracking this metric in 2008.

S&P 500 Revenues Above In Line Below Estimates Q2 2020

The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings decline for the second quarter is -35.7%, which is smaller than the earnings decline of -42.4% last week. Positive earnings surprises reported by companies in multiple sectors (led by the Consumer Discretionary sector) were responsible for the decrease in the overall earnings decline during the week. If -35.7% is the actual decline for the quarter, it will mark the largest year-over-year decline in earnings reported by the index since Q4 2008  (-69.1%). It will also mark the fifth time in the past six quarters in which the index has reported a year-over-year decline in earnings. Two sectors are reporting year-over-year growth in earnings, led by the Utilities sector. Nine sectors are reporting a year-over-year decline in earnings, led by the Energy, Industrials, Consumer Discretionary, and Financials sectors.

S&P 500 Earnings Growth Q2 2020

The blended revenue decline for the second quarter is -9.6%, which is smaller than the revenue decline of -10.1% last week. Positive revenue surprises reported by companies in multiple sectors (led by the Consumer Discretionary and Information Technology sectors) were responsible for the decrease in the overall revenue decline during the week. If -9.6% is the actual decline for the quarter, it will mark the largest year-over-year decline in revenue reported by the index since Q3 2009 (-11.5%). Two sectors are reporting year-over-year growth in revenues, led by the Information Technology sector. Nine sectors are reporting a year-over-year decline in revenues, led by the Energy and Industrials sectors.

S&P 500 Revenue Growth Q2 2020

Looking ahead, analysts predict a (year-over-year) decline in earnings in the third quarter (-22.9%) and the fourth quarter (-12.1%) of 2020. However, they also project a return to earnings growth in Q1 2021 (13.4%).

The forward 12-month P/E ratio is 22.0, which is above the five-year average and above the 10-year average.

During the upcoming week, 129 S&P 500 companies (including one Dow 30 component) are scheduled to report results for the second quarter.

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John Butters

Vice President, Senior Earnings Analyst, Investor Relations

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His weekly research report, “Earnings Insight,” provides analysis and commentary on trends in corporate earnings data for the S&P 500 including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).

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