S&P 500 Earnings Season Update: May 8, 2020

To date, 86% 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 (66%) is below the five-year average. In aggregate, companies are reporting earnings that are 2.3% above the estimates, which is also below the five-year average. In terms of sales, the percentage of companies (58%) reporting actual sales above estimates is below the five-year average. In aggregate, companies are reporting sales that are 0.9% above estimates, which is above 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 -13.6%, which is smaller than the earnings decline of -14.3% last week. Positive earnings surprises reported by companies in multiple sectors (led by the Industrials sector) were mainly responsible for the decrease in the overall earnings decline during the week. If -13.6% 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 Utilities sectors. Five sectors are reporting a year-over-year decline in earnings: Consumer Discretionary, Financials, Energy, Industrials, and Materials.

The blended revenue growth rate for the first quarter is 0.6%, which is slightly below the revenue growth rate of 0.7% last week. Negative revenue surprises reported by companies in the Utilities and Energy sectors were mainly responsible for the decrease in the overall revenue growth rate during the week. If 0.6% 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%). Six sectors are reporting year-over-year growth in revenues, led by the Health Care sector. Five 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 (-40.6%), third quarter (-23.0%), and fourth quarter (-11.4%) of 2020. However, they are also project a return to earnings growth in Q1 2021 (12.2%).

The forward 12-month P/E ratio is 20.4, which is above the five-year average and above the 10-year average. 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.

During the upcoming week, 21 S&P 500 companies (including one Dow 30 component) are scheduled to report results for the first quarter.