S&P Earnings, Updated: Expect a Retest of March Lows

This is a follow up to my post on April 23^rd and highlights just how bad things have actually become. Below are the latest S&P 500 reported earnings as of the close of business on 5/06/09:

This is the latest update from Howard Silverblatt, the S&P Senior Index Analyst, regarding reported earnings so far:

425 issues (88.94% market value) reported: initial good reports long gone, actuals are -18% off estimates (see Energy note), and -36.1% behind last year. 161 issues beat estimates, but only 69 beat last year's earnings; 248 missed with 63 beating last year's EPS. 35 Energy issues estimated to contribute $1.46 to index->actual $0.04 operating; Q1'08 they were $3.50 (hits for CHK, DVN, APA:$-1.28 index operating loss). Health Care contributing 26.6% of Q1 EPS; small Y/Y gain of 7.1%, but it's all relative, only group to post Q positive EPS since Q1,'07. Consumer Discretionary in the red (Q1,'09+Q4,'08), s/b positive with GM (to add $0.11 to index EPS); after 7Qs of negative growth (from Q1,'07). Consumer Staples expected to post lower EPS (-4.8%), but EPS have been 'relatively' good over period. Sector continues to pay and increase dividends, now accounts for largest share of dividends 17.0% (Financials were over 30%, now 9.3%). Sales down -13.7% with 109 beating last year and 315 falling short. As Report EPS for 12 Mo Sep,'09 estimated to be negative ($-1.83 EPS) - first time in index history.

Note Howard’s comments regarding “initial good reports long gone” – good call Fred Voetsch in your comments to my previous article! And what about estimated EPS for 12 months ending September ’09 being negative for the first time in index history? It is even more evident to me from the reported numbers above that year-on-year revenue is under pressure. Out of the 425 issues that have reported, only 109 issues had an increase in revenue and this includes 19 financials who had government help in one form or another. Considering that the majority of the remaining increase was driven by healthcare, this does not paint a pretty picture. As I mentioned previously, there is only so much cost cutting you can do to prop up earnings on a short-term basis. After that, earnings have to fall to reflect decreasing revenue. I still believe that once the market wakes up to this fact, expect a retreat from current levels and a retest of the March lows.

Comments

[bartpr:]

the advance delcines have demonstrated more strength in this rally the the one before the mar lows. i believe this means something in terms of a change in sentiment to the bullish side. i believe there will be a correction, but more than this investor overall feel the the stimulus pak will do more good for gdp than anything else that is in front of us, including earnings estimates

May 12 06:08 AM

[mrresponsible:]

Now is the time to use chart to investigage the companies that earning have declined the most and start buying during interday trading the ones that you think have the best upside.

May 12 09:52 AM

[No one:]

I disagree adamantly with that. I have followed markets for 45 years now. If the S&P drops below the March low, it is the end of the United States of America because it would mean 9.6 trillion dollars is not enough to stimulate the economy. By 2015 an increase of Federal debt WILL NOT result in any increase in GDP. So we drop below 666, then how do we climb up again in at a time when the US is moving toward second world status? Just give it more time? We don't have more time. I would bet there are many on this board who know exactly what I mean.

May 12 10:41 AM

[Fred Voetsch:]

As anyone wll tell you (or me) P/E really means nothing if the future looks bright...and there's the problem.

It hardly looks bight and we have P/E ratios of over 100 on the S&P 500, over 60 on the NASDAQ 100
www.bullandbearwise.co...
and over 40 for both the DJIA and DJTA
online.wsj.com/mdc/pub...

We also have a 0% interest rate with nowhere to go but up.

hmmm....

Well, on the plus side we have a government that is outright hostile to business and those who actually pay taxes but is literally scooping billions over to their buddies at GS via AIG and nobody seems to care as long as the market goes up another day.

An let's not forget that trade has dropped off a cliff and China is working on replacing the dollar as the world's reserve currency, but not to worry, Jim Cramer says everything will be alright and it's not like Jim Cramer would lie to us or anything.

www.thedailyshow.com/v...

I see this stuation more and more like 2000 where analysts are trying to convince investors that it will go on forever and investors want nothing more than to believe it at any cost.

May 12 05:07 PM