For Immediate Release
Chicago, IL – September 28, 2020 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes JPMorgan Chase & Co. JPM, Citigroup Inc. C, PepsiCo, Inc. PEP and Micron Technology, Inc. MU.
Handicapping Q3 Earnings Season
The overall earnings picture has been steadily improving over the last three months as big parts of the U.S. economy have started coming out of the pandemic-driven lockdown. The market will be looking for this improving earnings trend to accelerate in the Q3 earnings season.
The wide majority of companies have fiscal quarters that correspond with the calendar quarters, which is September 30th for Q3. These calendar-quarter companies will start reporting Q3 results after September 30th. Back in the day when Alcoa was in all the major indexes, the aluminum producer was generally seen as kick-starting quarterly reporting cycles.
The rump Alcoa took following its split a few years back means it no longer has this distinction, with the big banks now kicking off the reporting cycle. We will see the same with the September-quarter earnings season when JPMorgan and Citigroup report quarterly results before the market opens on October 13th.
Not all companies have fiscal quarters that correspond with the calendar quarters, with about two dozen S&P 500 members that have fiscal quarters that ended in August and 12 such companies have reported their fiscal August-quarter results in recent days.
We and other data aggregators put the results from these 12 index members as part of the Q3 tally. And we have another 6 S&P 500 members on deck to report fiscal August-quarter results this week, including Pepsi, Micron and others. Looked at this way, the Q3 earnings season has gotten underway already from our standpoint.
The expectation is for total S&P 500 earnings to decline -23.1% from the same period last year -3.1% lower revenues. This would follow the -32.5% decline in Q2 when economic and business activities came to a halt as a result of the pandemic driven lockdowns.
The earnings outlook has been steadily improving since the start of Q3, as economic and business activities have resumed.
The positive revisions trend is not restricted to Q3, but also for Q4 and beyond. Estimates have started moving up again in recent days, after staying essentially stable through most of August and the first week of September.
To get a sense of the aforementioned favorable revisions trend, the current $282.3 billion estimate is up from $281.2 billion last week. 2020 earnings and revenues are expected to be down -20.8% and -4.8%, respectively.
The above annual growth picture approximates to an index ‘EPS’ of $126.86 for 2020, down from $160.20 in 2019 and $159.10 in 2021.
For an in-depth look at the overall earnings picture and expectations for the coming quarters, please check out our weekly Earnings Trends report.
>>>> Q3 Earnings Season Preview
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