A Tough Earnings Season Could be Expected


According to S&P Global, various S&P 500 companies are scheduled to report quarterly earnings next week, and analysts collectively expect that earning for the third-quarter would be the year’s worst when it comes to profit growth.

Earnings per share growth is assumed to be at “a meager 3.8 percent, drastically smaller than all the other quarters with [their growth in] double digits,” stated the S&P Global portfolio manager, Erin Gibbs.

“Companies typically beat expectations, so the actual profit growth could be 3 to 5% higher than expectations just before reporting starts,” wrote Gibbs in an email that was sent on Friday to reporters.

The past two quarters observed particularly good rates of companies surpassing earnings estimates, with an average of a 73% rate of beating expectations for S&P 500 components.

Various financial sector components such as Citigroup, Bank of America, and JPMorgan, are scheduled to report next week. Overal, the sector is expected to see an earnings contraction of nearly 6% for the third quarter.

“Big positive surprises from financial companies next week could have a significant impact on the overall expectations for the quarter,” wrote Gibbs.

“Much of the first wave of earnings comes from the financial sector, and the results could prove dismal,” stated the chief strategist at Rhino Trading Partners, Michael Block.

“The banks are suddenly being viewed as growth stocks and we’ll see if this really works or if reality bites. I’m in the latter camp but pain and data could swing me at any time. That’s how this works,” wrote Block in a note Friday.

BlackRock and Wells Fargo are also set to report next week; JPMorgan is the only Dow component scheduled to report.