Jul 29, 2020 - Economy

S&P 500 earnings aren't looking as bad as feared in Q2

The outside of the New York Stock Exchange.

Photo: Johannes Eisele/AFP via Getty Images

S&P 500 companies have beaten earnings estimates at a higher pace than usual in the second quarter, Deutsche Bank analysts point out in a recent note to clients.

Why it matters: That suggests businesses may have rebounded more strongly than originally thought from the coronavirus pandemic in May and June, they argue.

By the numbers: With 129 companies (32% of S&P 500 market cap) reporting, 85% of companies have beaten the bottom-up analyst consensus, well above the historical rate of 73%. Further, five sectors have so far seen all companies beat, while another three have beat rates above 90%.

  • Companies that have reported have beat by 14% in aggregate, while the median company beat by 12%. These are also well above the average over the past 5 years of 4.9% and over the longer term of 3.4%.

The bottom line: The numbers suggest earnings may be much better than FactSet's current expectation for a 42.4% decline in Q2.

  • However, the numbers still point to a 33% decline, Deutsche notes, with the median company delivering a 21% fall.
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