SP 500 Weekly Earnings Update: Forward Earnings Curve Moving the Right Way (Still)

The “forward 4-qtr” estimate actually moved higher this week versus last week, coming in at $143.25 versus $142.98 from last week. This covers the period, Q3 ’20 through Q2 ’21.

The big change looking at IBES by Refinitiv’s “Earnings Scorecard” was the improvement in expected Financial sector revenue growth for Q2 ’20, from -7% on July 1 ’20 to -2.4% as of July 17th, 2020.

Unfortunately, so far anyway, Financial sector EPS did not change similarly, and in fact worsened, from an expected -47.7% as of July 1 to -51.7% as of July 17th, 2020, with many of the big Financials already reporting this week.

SP 500 Forward Earnings Curve:


click to open / enhance / expand


Readers should note the steady improvement in the sequential and 4-week rate of change, both moving in a positive direction.

The Health Care sector has had the sharpest improvement in expected EPS growth over the last three weeks, with Street consensus expecting -15.1% on July 1, ’20 and that number has improved already to -8.8% as of July 17th.

I wondered if that was Johnson & Johnson’s report early this week that boosted that sector improvement, with the JNJ beat-and-raise.

Summary / Conclusion: The forward earnings curve data continues to show slow, steady improvement. It’s not particularly exciting or fascinating, but if you look at the above spreadsheet, the revision patterns are unmistakable.

From a trading perspective, the Nasdaq-100 reversal on Monday into an “outside day” has many nervous about large-cap tech, and you should be. There is a good chance we could see a change in market leadership, maybe sooner than we think.

IBM reports Monday night after the bell. The stock hit an all-time-high in April, 2013 and has been much lower ever since. Can Arvind Krishna turn IBM around with the RedHat merger ? There’s a chance.

More on next week’s earnings this weekend.

Take everything written today with a substantial grain of salt and healthy skepticism. The markets change quickly.

Thanks for reading.


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