Goldman: Quarterly EPS Growth Will Be Negative At Least Through 2020
There's good news and there's bad news on the earnings front.
Actually, that's not true. It's mostly bad news. And that's to be expected under the circumstances.
But, if you ask Goldman, S&P 500 profit "growth" in the second quarter won't be nearly as dire as the bank initially expected. According to David Kostin, EPS growth for the period will be -70%, versus his previous estimate of -123%. One imagines this will be the only time in history when a 70% decline in quarterly profits represen
Only a cheap used car salesman on CNBC would trumpet sequential Q-on-Q % growth as a basis for a bull thesis right now.
Funny how they use Y-on-Y comps when it suits their argument, then abandon that metric as soon as it doesn’t.
This isn’t entirely accurate. As I’m sure you’re aware, the standard way of reporting GDP in the US is QoQ annualized. Also, if you don’t have access to the originals, and haven’t been reading the notes firsthand, for yourself, every week, for years, how do you know they “abandon that metric as soon as it doesn’t” suit their argument? Can you back up that claim? I’ve been reading their research for nearly a decade, and my experience doesn’t support your assessment.
Walt, my intent wasn’t to be critical of all analysts and strategists. Only those who paint half a picture when making their cases. For example, two upcoming quarters of consecutive 10% Q-on-Q EPS growth is great, but just remind the viewers that those results follow a -8% quarter and a -30% quarter, so we’re not gonna be back to where we started, and therefore these rallies are all predicated upon massive multiple expansions, etc etc etc.
I’m sure there are many good, thorough folks out there. But I’ve also seen a fair amount of metric cherry-picking from some of the usual suspects that regularly appear on CNBC. Would be nice if they painted the whole picture when outlining their arguments (…since the hosts and moderators don’t often push back or challenge).
If your point is that these are not normal numbers therefore the method of reporting should adapt with the times I am in full agreement. I like the second figure above with the graph showing absolute GDP.
I remember doing my 2007 SP500 estimates around this time and thinking $93 was a reasonable number. Fast forward 13 years, record low rates, a massive corp tax cut, massive deficits, a big individual tax cut and GS is talking $110.
Amazing???