Much digital ink has been spilled over corporate earnings this year.
And so on.
So let’s add this to the list: earnings are getting worse.
The following chart, which comes to us from the team over at Societe Generale, shows the momentum of earnings as measured by the 3-month rolling percentage revision of 12-month forward earnings forecasts. Basically, this is a smoothed view of how much or how little companies are cutting expectations.
“Looking at the sector level, the picture is not bright for the US market,” SocGen wrote in a note to clients on Tuesday.
“Since Alcoa kicked off the earnings season on 11 January, the consensus has not only lowered commodity-linked sectors’ 2016 [estimated earnings per share], but that of the entire market. Only the Insurance sector is expected to see EPS growth accelerate this year; all the sectors have seen their consensus EPS growth estimates slashed. In early January, the Oil & Gas sector was expected to see 2016 EPS contract only 4%, while three months later, consensus now forecasts a 50% [year-over-year] drop.”
At this time last year things were getting better and corporate America’s outlook basically peaked in the summer.
And it has been all downhill from there with the S&P 500, on balance, now expecting earnings to decline about 5% in the coming year.