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An Earnings Wins, Relatively Speaking - May 22, 2019

Q1 earnings for S&P 5001 companies are projected to rise 1.4% versus a year ago (with 93% reported as of May 21 – Refinitiv).

  • 75% of companies topped analyst forecasts.
  • On average, they beat by a wide margin.

A relative win? Yes. As the season got underway, profits were forecast to fall 2.5%.

Takeaways

Analysts were too conservative.

A big slowdown in global growth and the stronger dollar were stiff headwinds for multinationals.

  • Companies with a domestic focus saw profits rise over 6% (FactSet).
  • Companies with an international focus saw profits fall over 10%.

Revenue growth outpaced profit growth, highlighting pressure on margins.

Investor’s corner

Profit growth is supportive, but trade is the big wild card today.

If we look back at recent years, other wild cards have included – European worries, fiscal cliff, collapsing oil prices, dollar too weak, dollar too strong, U.S. elections, Brexit, fiscal cliff, geopolitical uncertainties, and more.

Control what you can control. A well-crafted financial plan takes volatility into account and incorporates your financial goals, time horizon, and risk tolerance.

@LWMLLC