SP 500 Weekly Earnings Update: Standard Bump in the Forward Estimate

With the rolling into the new quarter on Thursday, July 1 ’20, the standard bump in the “forward 4-quarter estimate” occurred with the publication of Refinitiv’s “This Week in Earnings” as the forward 4-quarter estimate now covers Q3 ’20 through Q2 ’21. (Determining the SP 500 EPS forward earnings curve isn’t rocket science: IBES data by Refinitiv provides the bottom-up quarterly estimates, thus any reader can build the forward earnings curve, as long as the core data is available.)

The new forward 4-quarter estimate is $142.66 (again, covering Q3 20 – Q2 ’21), vs last week’s forward 4-quarter estimate of $127.44 (covering Q2 ’20 through Q1 ’21).

Readers may wonder how this happens, but the Q2 ’20 SP 500 estimate of $23.16 has now fallen off the queue, and the new forward estimate will include the period of US economic recovery, however subdued you might that will be.

Q1 ’20’s actual SP 500 EPS was $33.13.

Q2 ’20’s current SP 500 EPS estimate as of July 2 ’20, is $23.16.

Q2 ’20 SP 500 EPS and revenue is expected to decline 43% and 11.7% respectively, as it stands today, according to IBES by Refinitiv data.

In this post from last week, this blog took a look at Q1 and Q2 SP 500 revenue estimates. It’s no mystery there will be a sharp deceleration into Q2 ’20 results, but that’s been well known by the market for over 12 weeks.

The SP 500 forward earnings curve: 

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One metric being watched closely is the 4-week rate of change on the various forward curves for SP 500 EPS, and while these rates of change improved dramatically up until early June, the improvement is much smaller since, but I suspect that will change once we start seeing actual Q2 ’20 SP 500 earnings and revenue, and the guidance therein.

Summary / conclusion: Delta and Walgreens are due out with earnings on Thursday morning, and having never been an airline investor I don’t follow Delta that closely, but the IBES by Refinitiv consensus estimate is for a loss of $4.24 per share for Q2 ’20, versus a profit of $2.35 per share in the year-ago quarter. That’s a HUGE swing in EPS (a lot of delta in Delta EPS – sorry). Walgreen’s might be more interesting given the stability of the retail pharma business but WBA has not performed well the last 10 years, per this chart from YCharts.

Click to open / expand / enhance


The week after next, the floodgates open for Financial stocks like the big banks and some brokers, and that will be interesting.

More to come this weekend, and next week.

Please take any opinion issued on this site with substantial skepticism and a healthy dose of salt. The world changes quickly these days, and when it does opinions can change frequently and not be updated.

Thanks for reading.





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