Earnings Season Moves Into High Gear

Earnings season moves into full gear this week, with 58 companies in the S&P 500 index reporting 4Q financial results. Out of those companies, four mega-cap (over $200 billion) companies will report this week, including Johnson & Johnson (NYSE: JNJ), Comcast (NASDAQ: CMCSA), Intel (NASDAQ: INTC) and Procter & Gamble (NYSE: PG).

All Eyes on Johnson & Johnson This Week

Analysts are likely to take a keener interest in Johnson & Johnson’s forward earnings guidance following last week’s surprise decision to slash a legal award against the company by over $1 billion. JNJ lost a lawsuit related to the use of its antipsychotic drug Risperdal. The judge gave no reason for the reduction, but the news is positive for creditors and shareholders alike and could open the door to additional modifications.

The stock has lagged the broader market over the past year, returning 14.14% compared to 24.67% for the S&P 500 index. So far, in 2020, the stock is up 2.2% and could get an additional boost from the favorable court decision. First, investors will need to get past any potential negative surprise from next week’s earnings release. Analysts estimate the company will report earnings per share (EPS) of $1.87, a downward revision of 3.11% over the last 90-days, and 5.1% lower than the amount stated in 4Q18.

Robust Earnings Season So Far

An S&P 500 earning season update published by FactSet says that of the 9% of companies that have reported 4Q results, 72% of them reported actual EPS figures that are above analysts’ estimates, which is in line with the five-year average number. Despite these positive results, investors may want to consider a more defensive posture. FactSet reports, “Five sectors are reporting (or are expected to report) year-over-year growth in earnings, led by the Utilities sector. Six sectors are reporting a year-over-year decline in earnings, led by the Energy, Consumer Discretionary, and Materials sectors.” It is interesting to note that earnings growth is coming from defensive sectors like Utilities and declining in cyclical sectors like Consumer Discretionary and Materials. (For more see: Is It Time for Investors to Turn Defensive?)

Use Finscreener’s Earnings Calendar to Follow the Action

You can follow all the results using our Earnings Calendar. To see the same four stocks mentioned in this blog, choose “S&P 500” from the "market" field in the upper left of the page. Next, to filter down the stocks, select “Mega ($200 bn - more)” from the "market cap" field in the same upper left part of the webpage. Finally, if not already selected, choose “This Week” in the middle of the page on the left. When finished, you should be able to see the same four stocks mentioned here. If you cannot view these filters, try clicking the “down arrow” in the upper right of the screen to reveal them.

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Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.