S&P 500 Earnings Revisions Turned Slightly Negative, Again

S&P 500 Earnings Revisions Turned Slightly Negative, Again


This upcoming week, readers will see the “quarterly bump” in the forward 4-quarter estimate with the key metric expected to rise from the $127.98 this past week to the low $140 area as the forward estimate period will cover Q3 ’20 through Q2 ’21.

Looking at the forward EPS curve, the revisions this past week, turned slightly negative reversing some of the progress made the last 4 – 6 weeks, but it shouldn’t worry too many readers yet.

As readers can see the latest week’s revisions are a little more negative than the previous week.

Q3 and Q4 ’20 expected S&P 500 EPS and revenue growth:

Q3-Q4'2020 SP500 Eps Revision

Q3-Q4’2020 SP500 Eps Revision

This chronological progression should be helpful to readers since it shows the quarterly estimates for Q3 and Q4 ’20. Most investors are keyed into Q2 ’20 earnings which start being reported in two weeks.

Summary / Conclusion: 

What was interesting about Nike’s (NYSE:) report: the companies with the May ’20 quarter-end are reporting the full brunt of the COVID-19 economic impact, versus the first quarter ’20 reports which had a decent January and February in terms of “normal” economic activity, and then the wheels came off the cart in March, ’20. The second-quarter earnings reports ended June ’20 will have a horrible April, and then should see slightly better results in May and June ’20.

Those May ’20 quarter-end reports – like FedEx (NYSE:) and Micron (NASDAQ:) this coming week – both have a May ’20 quarter-end (or in the case of FedEx, a May ’20 year-end).

There isn’t much to say this week, other than the big reports start with the Financials around July 10, 20 and I’d expect revisions to be contained until then.

From a “macro” perspective, I do think the President and Congress will agree on a 4th fiscal stimulus package, which Jay Powell has strongly recommended and is the faster the better in my opinion. That will likely help sustain – like the kicker did – and should help sustain household income through year-end.

Take everything on this blog with a grain of salt and a high degree of skepticism. These are simply my own opinions.

The blog will gradually return to the old metrics of PE, earnings yield, etc., as the “rate of change” importance fades.



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Brian Gilmartin


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