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S&P 500 Now Projected to Report a Year-over-Year Decline in Earnings in CY 2020

Earnings

By John Butters  |  March 30, 2020

Analysts now expect the S&P 500 to report a year-over-year decline in earnings in Q1 2020 (-5.2%), Q2 2020 (-10.0%), and Q3 2020 (-1.1%). Given these estimated declines for the first three quarters of the year, do analysts now believe the index will report a year-over-year decline in earnings for CY 2020?

The answer is yes.

During the past week, the aggregate earnings growth rate for CY 2020 changed from slight year-over-year earnings growth on March 24 (+0.6%) to a slight year-over-year earnings decline on March 25 (less than -0.1%).

However, expectations for earnings growth for CY 2020 have been falling over the past few months. On September 30, the estimated earnings growth rate for CY 2020 was 10.4%. By December 31, the estimated earnings growth rate had fallen to 9.2%. Today, the estimated earnings decline is -1.2%.

S&P 500 Earnings Growth Rate CY 2020

Five of the 11 sectors are now projected to report a year-over-year decrease in earnings for CY 2020: Energy (-62.3%), Industrials (-10.2%), Consumer Discretionary (-8.0%), Materials (-3.5%), and Financials (-2.2%).

S&P 500 Earnings Growth CY 2020

If the index reports a year-over-year decline in earnings of -1.2% CY 2020, it will mark the first time the index has reported an annual year-over-year decrease in earnings since CY 2015 (-0.6%). It will also mark the largest annual year-over-year decrease in earnings since CY 2008 (-25.4%). Analysts in aggregate currently expect earnings growth to return in CY 2021 (14.5%).

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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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