With a refreshing dip in temperatures and the scenic leaf colors here in New England, fall is one of our favorite seasons – but it does not compare to earnings season! As the market adage tells us – earnings are the mother’s milk of stock prices. Earnings Season gets going in full force this week as approximately 120 S&P 500 companies are scheduled to report results. Well-known companies reporting this week include Procter & Gamble, McDonald’s, Kimberly-Clark, United Parcel Services, Ford Motor, Las Vegas Sands, Caterpillar, Microsoft, Boeing, Visa, 3M, Amazon.com, Intel, and Verizon.
Looking at the earnings action from last week, the major banks were in the spotlight. Citigroup, JPMorgan Chase, and Bank of America all posted earnings that were better-than-expected, while Goldman Sachs reported mixed results, missing on earnings, but posting revenues slightly ahead of expectations. Highlights away from the banking sector included UnitedHealth Group which beat on both the top and bottom lines, and Netflix, whose shares initially jumped before pulling back from those levels as the company beat on earnings but missed on domestic paid subscriber additions.
Even though things are just getting started, it’s worth taking a quick look at the scoreboard. For the third quarter of 2019, with 15% of the companies in the S&P 500 reporting actual results, 84% of S&P 500 companies have reported a positive EPS (earnings per share) surprise, which is above the 5-year average of 72%, according to data from FactSet. Estimates are for an earnings decline of 4.7% for the S&P 500 for the third quarter of 2019. Remember, low hurdles are easier to clear and the bright side about low expectations is that it’s not very difficult to meet or exceed those expectations!
As always, call us with any questions you may have, or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC