The US 4th quarter earning season starts slowing this week with around 100 companies in the S&P 500 reporting after the 122 that released results last week, while in Australia the interim reporting season accelerates with 15 leading companies down to report, led by the Commonwealth Bank.
As well as the CBA on Wednesday other companies reporting include Argo (today) James Hardie and CIMIC (Tuesday), Shopping Centres of Australasia, IAG and Dexus (Wednesday), Downer EDI Mirvac, AGL (Thursday) and News Corp and REA (Friday).
The AMP’s chief economist, Dr. Shane Oliver says “2018-19 consensus earnings growth expectations have fallen to around 3% for the market as a whole not helped by slower growth globally as well as locally, with resources running around 8% and the rest of the market around 2%.
“Resource, building materials, insurance, and healthcare look to be the strongest with telcos, discretionary retail, media and transport the weakest and banks constrained.
“Key issues will be around the impact of the housing downturn, possible changes to franking credits if there is a change of government and how the consumer is holding up,” he wrote in a note at the weekend.
Downer EDI could announce the sale of its contract mining operation with its announcement. There have been market rumors about a sale deal in the past few weeks.
In the US companies due to report this week include Google parent Alphabet reports results tomorrow morning, Sydney time.
Others reporting include Estee Lauder, Archer Daniels Midland, Snap, Yum Brands, Walt Disney, Hasbro, Mattel, Ralph Lauren, News Corp, Twitter, General Motors, Sysco and Gilead Sciences.
FactSet said in a note at the weekend that “To date, 46% of the companies in the S&P 500 have reported actual results for Q4 2018. In terms of earnings, the percentage of companies reporting actual EPS above estimates (70%) is below the five-year average.”
“In aggregate, companies are reporting earnings that are 3.5% above the estimates, which is also below the five-year average. In terms of revenues, the percentage of companies reporting actual revenues above estimates (62%) is above the five-year average.
“In aggregate, companies are reporting revenues that are 0.8% above the estimates, which is also above the five-year average. Ten of the 11 sectors in the S&P 500 “are reporting year-over-year earnings growth. Five sectors are reporting double-digit earnings growth, led by the Energy, Industrials, and Communication Services sectors,“ FactSet.
“Ten of the 11 sectors are reporting year-over-year growth in revenues. Three sectors are reporting double-digit growth in revenues: Communications Services, Energy, and Real Estate.”
Looking at future quarters, FactSet said “analysts predict a decline in earnings for the first quarter of 2019 and low single-digit growth in earnings for the second and third quarters of 2019. The forward 12-month P/E ratio is 15.7, which is below the five-year average but above the 10-year average.”
