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Buckle Up: This Earnings Season May Be A Bumpy Ride

Say Contributor
Earning Season is coming. And this time, it might be a tough one, as more than 80 S&P; 500 companies have warned that second quarter earnings will likely be flatter than anticipated. Time Of The Season As we’ve said earlier Earning Call Season is when “a company’s management gets on a big, public conference call with analysts to answer questions about what’s in its quarterly earnings report and what’s going on with the profits, losses, and anything else that might move the stock.” (Not an analyst? Here’s some info on how to ask questions on a bunch of upcoming calls via Say.) Down Market These calls start this week, and for a number of reasons expect management to deliver bad news. Apple, who is just not having a great year, is expected to report a 14.7% decline in second quarter profit margins. Road and railway freight companies are generally considered the canary in the coal mine for growth, and unfortunately the trucking company JB Hunt is expecting profit growth of 1.7% this quarter, which is quite a drop from the 15.2% increase analysts expected only six months ago. All in all, this could be the biggest quarterly contraction in three years. But Why? Last year corporate earnings went through the roof because of President Trump’s 2017 tax cuts. That effect has largely worn off. While Trump’s tax cuts were helpful in making corporations richer, it would seem his tariff war is well on its way to undoing that growth. And China’s ongoing economic slowdown isn’t helping the situation either. It would seem that just like the Federal Reserve, companies everywhere are feeling a bit nervous about the state of the world. But hey, maybe the interest rate cut will help? -Michael Tedder Picture: Adobe

Earning Season is coming. And this time, it might be a tough one, as more than 80 S&P 500 companies have warned that second quarter earnings will likely be flatter than anticipated. Time Of The Season As we’ve said earlier Earning Call Season is when “a company’s management gets on a big, public conference call with analysts to answer questions about what’s in its quarterly earnings report and what’s going on with the profits, losses, and anything else that might move the stock.” (Not an analyst? Here’s some info on how to ask questions on a bunch of upcoming calls via Say.) Down Market These calls start this week, and for a number of reasons expect management to deliver bad news. Apple, who is just not having a great year, is expected to report a 14.7% decline in second quarter profit margins. Road and railway freight companies are generally considered the canary in the coal mine for growth, and unfortunately the trucking company JB Hunt is expecting profit growth of 1.7% this quarter, which is quite a drop from the 15.2% increase analysts expected only six months ago. All in all, this could be the biggest quarterly contraction in three years. But Why? Last year corporate earnings went through the roof because of President Trump’s 2017 tax cuts. That effect has largely worn off. While Trump’s tax cuts were helpful in making corporations richer, it would seem his tariff war is well on its way to undoing that growth. And China’s ongoing economic slowdown isn’t helping the situation either. It would seem that just like the Federal Reserve, companies everywhere are feeling a bit nervous about the state of the world. But hey, maybe the interest rate cut will help? -Michael Tedder Picture: Adobe