SFY - Earnings Roundup: Will COVID-19 Lead To Lower Earnings?
By David Aurelio
As COVID-19 spreads, should investors expect to see an impact to 20Q1 earnings expectations? S&P 500 year-over-year (Y/Y) 20Q1 earnings growth estimates have fallen to 1.6% from 5.4% on January 31, 2020, and StarMine models from Refinitiv suggest that more downward revisions will follow.
Exhibit 1: S&P 500 ppts Change in Y/Y Earnings from Start of Quarter to Start of Earnings Season
Source: I/B/E/S data from Refinitiv
In a typical quarter, pervasive optimism bias in sell-side estimates tends to be self-corrected as earnings season approaches as analysts make downward revisions to estimates.