I don't envy
the finance folks and public relations teams charged with
explaining second-quarter results. As Nicholas
Jasinski writes on Barrons.com today, it could be the
most bizarre earnings season in memory. The last three months had a little bit
of everything. Here's Nick:
The second quarter of 2020
included an April of nationwide economic lockdown, a May of rapid reopening and
releasing of pent-up demand, and a June in which that recovery met new
coronavirus outbreaks and some reimposed restrictions on activity in certain
states. Through it all, consumers and businesses have been forced to adjust
their daily tasks, working conditions, and spending patterns to a
pandemic-impacted world. Needless to say, it was a difficult quarter to
predict.
The quarter is
likely to continue the recent attention on the haves and have nots.
According to data from
Credit Suisse chief U.S. equity strategist Jonathan Golub, S&P 500
technology-sector sales are expected to fall by less than a percentage point
from a year earlier, while earnings are forecast to fall by 9.6%. After
buybacks, tech earnings per share are seen falling 8.1%.
But not
everyone will have it quite so good.
In more cyclical and economically sensitive
sectors, the year-over-year numbers are much uglier. The greatest drop in
second-quarter earnings per share is expected in the S&P 500 energy sector.
Analysts expect a 153.6% decline, meaning the consensus forecast is for the
sector to have lost money in the most recent quarter. Not surprising given the
sudden drop in energy demand because of the coronavirus crisis and resulting
crash in oil prices. The sector’s revenue is forecast to tumble 42.4%.
Consumer discretionary firms
are also expected to report negative second-quarter earnings. Analyst consensus
is for a 115.4% drop in earnings per share on 19.5% lower revenue, according to
Golub.
Nick has
more details on sector-by-sector expectations here.
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