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Gearing Up for Q1 Earnings - April 10, 2019

Q1 earnings season unofficially begins on Friday, April 12.

  • It kicks off with reporting from several major banks.

As of April 9, Refinitiv is forecasting a 2.5% drop in Q1 S&P 5001 profits.

It’s a stark contrast from double-digit growth in 2018.

Major reasons—

  • The cut in the corporate tax rate aided results last year.
  • Overseas growth has slowed, which will likely take a bite out of earnings of larger multinationals.
  • The strong dollar appears set to modestly pressure revenues, as companies translate overseas sales into more expensive dollars.
  • Profits margins are forecast to decline.

Recent market gains suggest a weak Q1 may already be priced into shares.

  • The bar is set low. Any upside surprises could be supportive.
  • Recent data suggest U.S. and China growth may stabilizing.
  • Fed flexibility has encouraged the bulls.

Risks—

A weak Q2, if it occurs, is not priced into shares. Corporate guidance could sway sentiment.

Investor’s corner

Adhere to the investment plan. It is the roadmap that guides a long-term investor when uncertainty creeps into the picture.

@LWMLLC