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S&P 500 Now Projected to Report a Y/Y Decline in Earnings in Q2 2020

Earnings

By John Butters  |  March 23, 2020

The estimated earnings decline for the S&P 500 for the first quarter is -2.9%. If -2.9% is the actual decline for the quarter, it will mark the largest year-over-year decline in earnings for the index since Q2 2016 (-3.2%). 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. Looking at the second quarter (Q2 2020), what are analyst expectations for year-over-year earnings? Do analysts believe the earnings declines will continue in the second quarter of 2020 as well?

The answer is yes.

Last week, the aggregate earnings growth rate for Q2 2020 changed from slight year-over-year earnings growth on March 12 (+0.8%) to a slight year-over-year earnings decline on March 13 (-0.7%).

However, expectations for earnings growth for Q2 2020 have been falling over the past few months. On September 30, the estimated earnings growth rate for Q2 2020 was 8.0%. By December 31, the estimated earnings growth rate had fallen to 5.7%. Today, the estimated earnings decline is -3.9%.

S&P 500 Earnings Growth Rate Q2 2020

Four of the 11 sectors are now projected to report a year-over-year decrease in earnings for the second quarter: Energy (-68.4%), Consumer Discretionary (-14.4%), Industrials (-9.9%), and Financials (-7.4%).

S&P 500 Estimated Earnings Growth Rate Q2 2020

If the index reports a year-over-year decline in earnings of -3.9% in the second quarter, it will mark the largest year-over-year decline in earnings for the index since Q1 2016 (-6.9%). It will also mark fifth time in the past six quarters in which the index has reported a year-over-year decline in earnings. Analysts in aggregate currently expect earnings growth to return in Q3 2020 (3.0%) and double-digit earnings growth to return in Q1 2021 (14.1%).

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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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