Tags: Earnings | Krantz | energy | S&P 500

USA Today: The Emerging Portrait of Q1 Earnings Could Be Dismal

By    |   Thursday, 26 March 2015 06:00 AM

There might be a train wreck ahead — investors should look out for withering corporate profits when first-quarter results start pouring in, with some companies' profits expected to vanish entirely, according a USA Today review of S&P Capital IQ data.

In fact, at least 19 companies in the bellwether S&P 500 are expected to see their profits plummet by 90 percent or more, according to analyst projections.

Analysts' consensus projects that overall S&P 500 earnings will slump by almost 3 percent for the first quarter of this year. All 10 recessions since 1945 were preceded by downward trending growth in earnings per share during the previous 12-month period, said Sam Stovall, mmanaging director of U.S. Equity Strategy at S&P Capital IQ’s Global Markets Intelligence group.

"Seeing corporate profit drop precipitously is a bit ominous. It's a serious issue for investors since profit growth has been one of key underpinnings of the bull market now six years in the running," USA Today's Matt Krantz wrote.

Among the various sectors, Krantz said energy stocks are "expected to be a field of pain" for the first quarter.

But Krantz noted that until the first quarter results are actually in, analysts' projections remain just that – projections, not fact. "Some of these companies could surprise on the upside. And investors don't seem to be panicked, yet," he wrote.

The S&P 500 companies expected to swing to actual losses for the first quarter from profits during the year-ago period are: Mattel, Murphy Oil, Leucadia National, Hess, QEP Resources, Amazon, Marathon Oil, Anadarko Petroleum, Apache, First Solar, Windstream and Cimarex Energy, according to data from Capital IQ and USA Today research.

Sheraz Mian, director of research at Zacks Investment Research, said in an article for Financial Sense that trends in estimate revisions suggest the first quarter could shape up to be a "very weak reporting cycle."

"The magnitude of negative revisions that we saw for 2015 Q1 is the highest of any other recent quarter," Mian declared.

According to Zacks, total earnings for stocks were forecast to be up 5 percent in mid-December, but are now expected to be down 5.2 percent from the same period in 2014. Estimates for all 16 stock sectors tracked by Zacks are coming down, according to Mian.

Among the various stock sectors, he noted that medical and finance stocks are the only major sectors with strong positive earnings growth projections, with medical share earnings expected to be up 11.9 percent and financial share earnings projected to be up 9.5 percent.

However, Mian said leadership is thin even in those sectors, with Gilead Sciences responsible for a significant portion of medical sector earnings projection growth and Bank of America responsible for a good deal of the financial sector earnings growth projections.

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There might be a train wreck ahead — investors should look out for withering corporate profits when first-quarter results start pouring in, with some companies' profits expected to vanish entirely, according a USA Today review of S&P Capital IQ data.
Earnings, Krantz, energy, S&P 500
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2015-00-26
Thursday, 26 March 2015 06:00 AM
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