Earnings are set to slump the most since 2009 as coronavirus batters businesses — and forecasts show the worst is yet to come

Xinhua/Wang Ying/Getty Images

  • So far, blended quarterly earnings declined 14.5% in the first quarter with 9% of S&P 500 companies reporting, according to a Friday note from John Butters, a senior earnings analyst at FactSet.
  • If earnings do decline 14.5% this quarter, it will be the largest fall since the 15.7% drop in the third quarter of 2009.
  • It will also mark the fourth time in the last five quarters that year-over-year earnings have dipped into negative territory, according to Butters.
  • Read more on Business Insider.

First quarter earnings are set to post the largest year-over-year decline since 2009, the biggest post-great financial crisis slump.

But the worst may be yet to come as the coronavirus pandemic continues to hit businesses.

Last week, about 9% of S&P 500 companies reported earnings, according to FactSet. So far, the blended quarterly earnings decline – which includes companies that have reported as well as those yet to report – is 14.5%, according to a Friday note from John Butters, a senior earnings analyst at FactSet.

“Negative earnings surprises reported by companies in the Financials sector were mainly responsible for the increase in the overall earnings decline during the week,” Butters wrote.

Last week, big banks kicked off the earnings season, with Morgan Stanley,Goldman Sachs, Citigroup, JPMorgan, Bank of America, and Wells Fargo all reporting lower profits amid the coronavirus pandemic.

If earnings do decline 14.5% this quarter, it will be the largest fall since the 15.7% drop in the third quarter of 2009. It will also mark the fourth time in the last five quarters that year-over-year earnings have dipped into negative territory, according to Butters.


Read more:
BANK OF AMERICA: Buy these 12 under-the-radar stocks that have balance sheets perfectly built to weather coronavirus turbulence

In the coming weeks, a number of large technology companies are scheduled to report their quarterly earnings, including IBM,Netflix, and the other FAANG stocks.

Going forward, analysts are predicting more negative earnings in 2020, according to the note. The second quarter is forecast to be the worst this year, with earnings declining 26.6%, FactSet said. Analysts expect a 13.3% drop in the third quarter, and 4.8% drop to round out the year.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.