1Q20 Earnings Guidance & COVID-19

4Q19 Earnings Season & COVID-19

1Q20 Earnings Guidance & COVID-19

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Statistics 4Q19 Earnings: COVID stats and overview

As of March 18, 479 of 500 (96%) S&P 500 companies have reported 4Q19 earnings.  Given market action these past few weeks, this blog focuses on 1Q20 earnings guidance and COVID-19.

Which Companies Mentioned COVID-19 on Earnings Call

  • 213 companies (24%) mentioned COVID-19 or Coronavirus-19 on their earnings call.
  • 76 companies (58% of the 213) companies that mentioned COVID-19 on their earnings conference call
  • 58 companies (27% of the 213) mentioned the possible negative impact on 1Q20 earnings guidance.
  • However, 92% of these companies announced earnings in January and February 2020. Before the first US cases were announced.

S&P 500 Companies that announced lower 1Q20 earnings guidance from COVID-19, by sector:

  • Consumer discretionary: 39
  • Info Technology 39
  • Industrial: 35
  • Health Care 34
  • Consumer Staples 17
  • Materials 17
  • Energy 10
  • Financials 9
  • Real Estate 5
  • Comm Services 4
  • Utilities 4
  • TOTAL of 213 Companies

These 213 companies estimate a 6% revenue exposure to China. (See the sectors above)

The rest of the 287 companies in the S&P 500 have an estimated revenue exposure of 4 ½% to China.

For all 500 S&P stocks, on average, revenue exposure to China estimate is  5.14%,

At the end of the day, 1Q20 earnings will be impacted US Companies’ trade with China.

Conclusion

  • To date, 72 companies have issued negative guidance, which is below the five-year average
  • The five-year average of companies issuing negative guidance is 75 companies.

This blog says nothing about the oil war. But we know there is an oil war and it will impact the top of the supply chain. OXY has cut dividends by 86%.  However, that’s a separate topic altogether.

In addition to lowering rates to zero, a stimulus package totaling $1.3 trillion has been approved. The Legislative & Executive Branches both agree this stimulus isn’t to be used for share buybacks. This monitoring should be very simple for the companies and the exchanges to include in their surveillance and audit trail. Let’s see how that goes.

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