FAST FIVE: It's "The 1%" Vs Everyone Else: FAAMG Earnings Soar As Russell 2000 EPS Growth Craters
More importantly, if 0.7% remains the actual growth rate for Q4 after all companies have reported, it will mark the first time the index has reported year-over-year growth in earnings since Q4 2018 (13.3%), and will represent an end to the earnings recession that lasted for all of 2019.
So back to the actual earnings season, where as Goldman's David Kostin writes, 49% of S&P 500 companies beat consensus EPS estimates by more than one standard deviation, slightly above the long-term average of 46%.
Much of the earnings disappointment is due to energy companies: excluding the 40% drop in Energy EPS, S&P 500 EPS grew by an even stronger 5% in the quarter, while overall S&P 500 sales grew by 6%, in line with the 6% forecast, and while net profit margins fell by 68 bp in the fourth quarter, the decline was less than originally anticipated (-100 bp).
The 2020 EPS estimate has been cut by 0.7% during the past month and 1.2% during the past 3 months.
Finally, margins remain a risk for investors and Goldman expects only limited margin expansion through 2021.