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For Immediate Release
Chicago, IL – August 17, 2020 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Walmart Inc. WMT, Target Corporation TGT, The Home Depot, Inc. HD and NVIDIA Corporation NVDA.
Can the Earnings Picture Continue to Improve?
We have consistently been pointing out the improving trend in the overall earnings picture ever since the Q2 earnings season got underway last month. While earnings took a big hit in Q2, as was expected all along, the impact turned out to be less significant than initially projected. Importantly, this slightly less rough view is not confined to the second quarter, but also extending to the current period (2020 Q3) and beyond.
All of this is in-line with what we are seeing in macroeconomic data as well that shows the U.S. economy steadily coming out of the pandemic-driven downturn. We saw this in recent readings about retail sales, jobs, and the factory sector that all show steady momentum.
We all know that a big support for the economy has been the extraordinary fiscal and monetary measures that were put in place in the wake of the pandemic. But a number of these supports have either ended or are coming to an end in the near future. The worry is that the recovery may lose some of its steam if the fiscal support measures are not extended, particularly for those parts of the economy that are expected to remain down for quite some time.
Beyond the macro issues, we discuss the overall earnings story that emerged out of the Q2 earnings season, now winding down, through the following charts.
Please note that through Friday, August 14th, we have seen Q2 results from 458 S&P 500 members or 91.6% of the index’s total membership. We have another 18 index members on deck to report results this week, including Walmart, Target, Home Depot, Nvidia and others.
Total earnings (or aggregate net income) for the 458 S&P 500 members are down -35.4% on -11.3% lower revenues. To round out this scorecard, 79.7% of these 458 index members have beaten consensus EPS estimates and the corresponding revenue beats percentage is 62.9%, with a blended beats percentage of 55.7%.
Q3 earnings for the S&P 500 index are currently expected to decline -24% from the same period last year. But the growth picture has been steadily improving since the start of July. We see a similar trend in place for 2020 Q4 and full-year 2020 estimates as well.
This is a notable improvement in the overall earnings picture since the start of the pandemic and is in-line with high-frequency macroeconomic data that is showing a similar improvement in the economy’s growth drivers.
The question at this stage is the extent of damage to this improving as a result of Congress’ inability to extend the pandemic-related relief measures that played a critical role in stabilizing the economic picture.
As would be expected, 2020 estimates came down as the pandemic unfolded, with the current -21.3% decline down from +7.9% growth at the start of the year. But as we mentioned earlier in the context of 2020 Q3 estimates, the revisions trend lately has been positive.
For an in-depth look at the overall earnings picture and expectations for the coming quarters, please check out our weekly Earnings Trends report >>>> Looking Ahead to a Better Earnings Picture
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Click to get this free report Target Corporation (TGT) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report The Home Depot, Inc. (HD) : Free Stock Analysis Report Walmart Inc. (WMT) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research