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S&P 500 Earnings Season Update: May 1, 2020

Earnings

By John Butters  |  May 1, 2020

To date, 55% 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 (65%) is below the five-year average. In aggregate, companies are reporting earnings that are 2.5% above the estimates, which is also below the five-year average. In terms of sales, the percentage of companies (63%) reporting actual sales above estimates is above the five-year average. In aggregate, companies are reporting sales that are 1.2% above estimates, which is also above the five-year average.

S&P 500 Earnings Above In Line Below Estimates Q1 2020

S&P 500 Revenues Above In Line Below Estimates Q1 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 first quarter is -13.7%, which is smaller than the earnings decline of -16.1% last week. Positive earnings surprises reported by companies in the Energy, Information Technology, and Health Care sectors were mainly responsible for the decrease in the overall earnings decline during the week. If -13.7% is the actual decline for the quarter, it will mark the largest year-over-year decline in earnings for the index since Q3 2009 (-15.7%). 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 Health Care and Consumer Staples sectors. Five sectors are reporting a year-over-year decline in earnings: Consumer Discretionary, Financials, Industrials, Materials, and Energy.

S&P 500 Earnings Growth Q1 2020

The blended revenue growth rate for the first quarter is 0.7%, which is above the revenue growth rate of 0.2% last week. Positive revenue surprises reported by companies in the Information Technology, Health Care, and Energy sectors were mainly responsible for the increase in the overall revenue growth rate during the week. If 0.7% 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 sector. Four sectors are reporting a year-over-year decline in revenues, led by the Materials and Energy sectors.

S&P 500 Revenue Growth Q1 2020

Looking at future quarters, analysts predict a (year-over-year) decline in earnings in the second quarter (-36.7%), third quarter (-20.1%), and fourth quarter (-9.4%) of 2020.

This week marked the first time the S&P 500 recorded a forward 12-month P/E ratio of 20.0 or higher since April of 2002.

The forward 12-month P/E ratio is 20.3, which is above the five-year average and above the 10-year average.

During the upcoming week, 148 S&P 500 companies (including two Dow 30 components) are scheduled to report results for the first 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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