S&P 500 Earnings Update
Here’s an update to a story I wrote this past weekend. It looks like Standard and Poors has updated some of their earnings estimates, but they also updated the reported earnings since I posted.
Here’s a link to a spreadsheet on Standard and Poors site. If you read my last post, you’ll notice a few changes they’ve made. On Jan 30th, they said “With 25.36% of the market value and 93 issues reported, actuals compute to a negative $-1.16 for operating (est $+3.02); -$3.18 for As Reported”
Today they’re saying “With 54.4% of the market value and 227 issues reported, actuals compute to a negative $-2.32 for operating (est $+818); -$8.89 for As Reported”
So over half of the S&P 500 has now reported earnings, and the results so far are even worse than last week. We now have about 2.5 times more companies to base estimates on, and the actual earnings are twice as bad as just a few days ago. They are still negative.
There’s another word for “negative earnings” – losses.
S&P also says “Expect charges to continue for Q4, as companies clean house for a better 2009” then, on the very next line they say “Provisions for layoffs should increase, with the actual cash flow charge taking effect in 2009“.
So which is it? A “better 2009″ or will the charges “take effect in 2009″? I don’t think we’re going to see both.
When companies lay off workers and tighten their belts and cut back on capital spending, that impacts the other companies that they buy from. Not to mention that the people laid off won’t be going on any spending sprees.
I’ve read on MarketWatch how the market has discounted all the bad news. “Yet it is clear that investors attempt to factor in as much future information as possible, and today, with the news uniformly bleak for corporate earnings and economic data, they are factoring in an extremely disappointing future. Anything less than the sum of all of our fears is likely to be a positive surprise, so depressed have our expectations and forecasts become.”
I don’t think they’re depressed enough. Not when S&P is still predicting earnings increases for 2009.
(The part below was added on Feb 4th, at 8pm)
Just had to add this. It really deserves another entry, but I’m too lazy right now. The latest update to the Standard and Poors spreadsheet (there’s a link at the top of this story) does away with numbers and simply says this:
“As Reported earnings are negative for the quarter; there has never been a AS Reported index level in the red”
That’s with “With 65.25% of the market value and 244 issues reported”
So unless the next 34.75% and 266 companies really blow everyone out of the water with super fantastic earnings, the current estimates are still way off.
Which means that the stock market still has a long way to fall.
gk
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