Earnings season begins heating up this week as some major companies start to report first quarter (Q1) numbers.
While the start to earnings season is usually associated with Alcoa’s announcement, which will be on April 18th, there are some big names reporting before that – Financials such as Blackrock (BLK) will be Thursday after the close, then we see Citigroup (C), JP Morgan (JPM), PNC, and Wells Fargo (WFC) all on Friday morning. There are others too – Bed Bath & Beyond on Wednesday and Delta (DAL) and Rite Aid (RAD) on Thursday.
But it’s the next week where things get heavy – 134 companies in the S&P 1500 will report next week followed by two weeks of about 450 companies reporting each week. Watch on April 26th when 173 companies report in a single day.
Expectations have been lowered since last quarter. This chart shows Bespoke’s “Net Earnings Revisions Spread”. Here’s how they define it:
“The net earnings revisions spread measures the number of companies that have seen positive analyst EPS revisions over the last month minus the number of companies that have seen negative revisions and expresses that net reading as a percentage of the total number of companies in the specific sector or group.” (emphasis mine)
When expectations are high, they’re tough to beat. When they are low…it’s easier. The reading from January 29th, 2018 was the highest since May 7th, 2010 (see chart).
So…what’s there to expect? The current forecast calls for S&P 500 profit growth of 18.5% (Thomson Reuters, 4-10-18).
The expectation level for earnings is low relative to last quarter and I’m thinking that there is still some good news yet to come out of companies from the most recent tax bill.
Low expectations + good news = Dave thinking earnings season could result in some tail wind in equity investor sails.
Keep looking forward,
Important Disclosure Information
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Wealth Management), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. All indexes referenced are unmanaged and cannot be invested into directly. The economic forecasts set forth may not develop as predicted. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument Wealth Management. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Monument Wealth Management is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of Monument Wealth Management’s current written disclosure statement discussing our advisory services and fees is available for review upon request.