On March 8, we published “Earnings Roundup: Will COVID-19 Lead to Lower Earnings?” Based on an updated review of analyst revisions data, it now seems clear that we are. The S&P 500 is expected to enter an earnings recession, which is defined as two consecutive quarters of year-over-year (Y/Y) earnings declines, starting in 20Q1. Analysts also anticipate that full year 2020 earnings will fall 2.0%. This outlook is meaningfully different from the pre-COVID-19 and crude oil price war view at the end of January. With earnings season quickly approaching, the question now is, should investors expect further downward earnings revisions?

Saudi state own oil giant Saudi Arabian Oil Co (IPO-ARMO.SE), commonly known as Saudi Aramco, is expected to IPO on Nov. 17. Reuters reports that bankers expect Saudi Aramco to be the most valuable company in the world at $1.5 trillion. This would be roughly 2.7 times the market cap of the S&P 500’s integrated oil & gas companies, which includes Exxon Mobil Corp (XOM.N), Chevron Corp (CVX.N), and Occidental Petroleum Corp (OXY.N). Saudi Aramco’s 2018’s revenue was roughly 75% of the total for S&P 500’s integrated oil & gas, which means that Saudi Aramco’s valuation is roughly 4.2 times

U.S. oil companies finished reporting 19Q3 earnings, posting a significant overall decline in YoY growth.  Notables including Exxon, Chevron, and Occidental experienced a decline of 54.1%, 26.5%, and 93.8% in YoY earnings.  Top-line revenue also declined 15.1%, 17.9%, and 4.9% respectively. Aggregate YoY earnings growth dropped 49.2%, while aggregate revenue declined 14.3%. Exhibit 1 highlights aggregated results for the S&P 500 Integrated Oil & Gas and Oil & Gas Exploration & Production sub-industries. Exhibit 1: 19Q3 Results for S&P 500 Energy E&P Decline in commodity prices It was expected to be a difficult quarter for the energy sector coming into

With oil majors beginning to report earnings next week, we look at how the Equipment Services sub-industry fared during 19Q3.  While Halliburton and Schlumberger both beat earnings expectations this quarter, both suffered a decline in YoY earnings growth of 32.0% and -6.5% respectively. Revenue growth also declined 10.1% for Halliburton while Schlumberger experienced flat growth at 0.4%. Equipment Services play a critical role in providing value-added services and equipment to exploration and production (E&P) companies that search for oil and gas. Activities include pressure pumping (assisting with hydraulic fracturing of geological formations), wireline logging (transmits data from a borehole), and

The unofficial kickoff to the Q1 2017 earnings season is set for Apr. 13, 2017, when several of the Financials sector’s banks are expected to report results for the quarter. Heading into the quarter, year over year (Y/Y) growth is expected to be strong for both earnings and revenue. As a result, the S&P 500 will likely post the highest growth in over 5 years.   Exhibit 1. S&P 500 Banks Industry 17Q1 Key Performance Indicators Sources: I/B/E/S data, Eikon Banks in Focus With the S&P 500 Banks Industry Index (.52P40101010) down 1.69% YTD, as of the Apr. 12 close, focus

Click here to view the dashboard in detail. Aggregate Estimates and Revisions Third quarter earnings are expected to increase 3.0% from Q3 2015. Excluding the energy sector, the earnings growth estimate improves to 6.7%. Of the 290 companies in the S&P 500 that have reported earnings to date for Q3 2016, 72.8% have reported earnings above analyst expectations. This is above the long-term average of 64% and above the average over the past four quarters of 70%. The Q3 2016 blended revenue growth estimate is 2.5%. Excluding the energy sector, the revenue growth estimate increases to 4.4%. 56% of companies have reported Q3 2016 revenue

What should you do when in the middle of an earnings recession? Set your expectations low and tune into the beats, at least that seems to be the theme this earnings season. Analysts typically become more bearish heading into earnings season; however, this quarter it appears as though they may have been overly pessimistic. As a result, of the 166 S&P 500 companies to report Q1 2016 earnings so far, 75% beat the street’s expectations. If this continues, it will be the highest percentage of over- performance since Q1 2010, when 78% reported above estimates. Exhibit 1.  S&P 500: Q1 2016 Blended