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S&P 500 Projected to Report First Double-Digit Decline in Earnings (-10%) in 10 Years in Q2

Earnings

By John Butters  |  March 27, 2020

Analysts have sharply reduced earnings estimates for Q2 2020 over the past few weeks. Since March 1, estimated dollar-level earnings for the S&P 500 for the second quarter have decreased by $49.6 billion (to $319.6 billion from $369.2 billion).

At the industry level, analysts have made the largest dollar-level cuts to estimates for companies in the Oil, Gas, & Consumable Fuels and Airlines industries. Combined, these two industries account for $22.6 billion (46%) of the total $49.6 billion decrease in expected earnings for the second quarter since March 1. Other industries that have seen substantial declines in estimated earnings over this period are Automobiles (-$4.1 billion), Hotels, Restaurants, & Leisure (-$2.8 billion) and Banks (-$1.9 billion).

S&P 500 Industries Change in Q2 2020 Earnings Since Mar 1

As a result of these downward revisions to estimates, the S&P 500 is now projected to report a year-over-year decline in earnings of -10.0% for Q2 2020, compared to expectations of earnings growth of 3.9% on March 1.

S&P 500 Earnings Growth Rate Q2 2020

If the index reports a year-over-year decline in earnings of -10.0% in the second quarter, it will mark the first time the index has reported a double-digit (year-over-year) decrease in earnings since Q3 2009 (-15.7%).

Five of the 11 sectors are now projected to report a year-over-year decrease in earnings for the second quarter: Energy (-92.6%), Consumer Discretionary (-31.6%), Industrials (-26.8%), Financials (-9.5%), and Materials (-7.4%).

S&P 500 Estimated Earnings Growth Q2 2020

Analysts in aggregate currently expect earnings growth to return in Q4 2020 (4.5%) and double-digit earnings growth to return in Q1 2021 (14.2%).

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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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