While everyone’s attention is focused on the earnings deluge set to be unleashed in the third quarter (and if the handful of companies reporting so far is any indication, this may be one of those quarters when companies underperform already drastically lowered EPS estimates, which at last check are set to tumble -5.5% Y/Y according to consensus), the big surprise is what has quietly taken place to Q4 consensus estimates.
First, a reminder of where Q3 stands from FactSet.
At the start of the peak weeks of the Q3 2015 earnings season, the blended earnings decline for the third quarter stands at -5.5%. Factoring in the average improvement in earnings growth during a typical earnings season due to upside earnings surprises (see page 2 for more details), it still appears likely the S&P 500 will report a year-over-year decline in earnings for the third quarter. If the index does report a year-over-year decline in earnings for the third quarter, it will mark the first time the index has reported two consecutive quarters of year-over-year declines in earnings since Q2 2009 and Q3 2009. Actually, make that three quarters in a row, because as of this past week, EPS in the fourth quarter, which on June 30 were triumphantly expected to post a solid 4.3% rebound, went from 0.2% to negative 0.4%.
This post was published at Zero Hedge on 10/13/2015.
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