Analysis: Earnings Season Likely to Be Worst Since 2009
This U.S. earnings season is on track to be the worst since 2009 as profits from oil and gas and commodity-related companies plummet.
So far, about three-quarters of the S&P 500 have reported results, with profits down 3.1% on a share-weighted basis, data compiled by Bloomberg News shows. This would be the biggest quarterly drop in earnings since the third quarter 2009 and the second straight quarter of profit declines. Earnings growth turned negative for the first time in six years in the second quarter this year.
The damage is the biggest in commodity-related industries, with the energy sector showing a 54% drop in quarterly earnings per share so far in the quarter, with profits in the materials sector falling 15%.
The picture is brighter for the telecom services and consumer discretionary sectors, with EPS growth of 23% and 19%, respectively, so far this quarter.
When compared with analyst expectations, about 72% of companies have beaten profit forecasts. That's only because the consensus has been sharply cut in the past few months, Jeanne Asseraf-Bitton, head of global cross-asset research at Lyxor Asset Management said in a telephone interview.
For the year as a whole, S&P 500 earnings are expected to fall 0.5%, data compiled by Bloomberg shows. For 2016, earnings growth now is seen at 7.9%, down from 10.9% in late July.
Next year's consensus is “still very optimistic,” Asseraf-Bitton said, citing the lack of positive catalyst seen for U.S. stocks in 2016 as well as the negative impact from the sharp slowdown in the U.S. energy sector.
By contrast, the eurozone is the only region worldwide where earnings are expected to “grow significantly” in 2015, according to a note from Roland Kaloyan, Societe Generale head of European equity strategy.
Euro Stoxx 50 earnings are expected to rise 10% in 2015 and 5.7% in 2016, data compiled by Bloomberg showed.
