Pandemic takes a bite out of earnings

Are you buying or selling? Or, buying when you think you should be selling? Selling when you think you should be buying? In today's DealBook newsletter from The New York Times, we note that investors seem unfazed by recent news on the rise in recorded coronavirus infections and signs that the latest batch of earnings reports will be some of the ugliest in history. Is the optimism justified? Or, is there another reason for the rally? #markets #stocks

Earnings season kicks off this week with more than 180 companies in the S&P 500 pulling earnings guidance due to #COVID-19. Nasdaq Chief Economist Phil Mackintosh Global Markets Reporter Jill Malandrino on #TradeTalks to discuss.

Interesting article in the WSJ discussing how investors are flying blind during 2nd quarter earnings releases based on a large number of companies pulling their guidance. According to the article more than 180 companies in the S&P 500 have pulled their earnings guidance in the wake of the economic crisis wrought by the coronavirus pandemic, limiting the visibility of investors. According to analysts polled by FactSet, corporate earnings among companies in the S&P 500 are projected to have fallen nearly 45% in the second quarter from a year earlier based on their report for July 10th. Back on March 31st, the estimated earnings decline for Q2 2020 was -13.6%. So earnings estimates for the second quarter continued to fall throughout the quarter. According to Dow Jones Market Data, the median spread on analysts’ earnings forecasts for companies in the S&P 500 has jumped to 40 cents for the second quarter from 30 cents in the first. They go on to say that the median spread ranged from 9 cents to 16 cents over the previous 13 years. The large spread in earnings forecast could lead to more volatility in stocks as they report earnings. #guidance #earningsestimates #stocks #earningsseason

Earnings season is here, but what does that mean amidst the pandemic and what can we expect? We’ll soon find out... “More than 180 com-pa-nies in the S&P 500 have pulled their earn-ings guid-ance in the wake of the eco-nomic cri-sis wrought by the coro-n-avirus pan-demic, lim-it-ing the vis-i-bil-ity of in-vestors. That has led to the widest dis-per-sion in earn-ings es-ti-mates among an-a-lysts since at least 2007. The wide gap sug-gests stocks could be in for a wild ride. That has hap-pened in-creas-ingly in re-cent weeks when Wall Street’s pre-dic-tions were wildly off base. Econ-o-mists gen-er-ally agree the re-cently com-pleted sec-ond quar-ter was likely the trough of the down-turn, but the ex-tent of the dam-age is still un-clear. Stock val-u-a-tions re-ally are now based on earnings power two years out.”

Second-quarter #earnings season is upon us with first 27 companies in the S&P 500 set to report their results this week from an unprecedented quarter. As always, big #banks are among the first companies to report. J.P. Morgan, Citi and Wells Fargo kick things off on Tuesday, followed by Goldman Sachs on Wednesday and Morgan Stanley and Bank of America on Thursday. Investors may be under appreciating the #billions in #fees banks will earn from #ppploans. Investment banking revenues, especially those earned on #debt and #equity underwriting, should be encouraging in the last quarter, credit provisions and loan losses have racked up and lending activity has been week. #Dividends could be at risk as new #Fed rules limit payouts. Can this sector finally see a #rally? Other highlights include results from PepsiCo on Monday and Delta Air Lines on Tuesday. UnitedHealth Group reports on Wednesday, followed by a busy Thursday: Netflix, Taiwan Semiconductor Manufacturing, and Johnson & Johnson all report. Finally, BlackRock and Kansas City Southern close out the week on Friday. #investingtips #earningsseason #investing101 #stocks #equities #becareful #takegains

The estimated earnings decline for the S&P 500 is 43.8% for the second quarter, according to data from FactSet as of early July. Such a result would represent the largest year-over-year decline in earnings since the fourth quarter of 2008, and a steep downward revision from the estimate as of March 31, which had been for a decline of 13.6%.

The economic crisis resulting from COVID-19 is unique in the sense that it has impacted almost all companies in almost all industries. The main question is how to reset the cost baseline in a sustainable way to be able to capitalize on new growth opportunities when they arise. #covid19 #ZBx #profitability

There has been a lot of talks and criticism on short term corporate guidance. Many companies skipped their forecasts due to the Coronavirus. The question is if Covid-19 will become a force to shy away from short term to a more sustainable/longterm view on corporate profits?