Revenue Season Q2
The second quarter earnings season has arrived, with 27 S&P 500 companies reporting their results this week for an unprecedented three months. As usual, the big banks will be the first to report. JPMorgan Chase, Citigroup and Wells Fargo start the season today, followed by Goldman Sachs on Wednesday and Morgan Stanley and Bank of America on Thursday.
Equities globally traded near the highest level since February, placing focus on whether the profit outlook will support gains driven by the central bank and fiscal policy support. In the US, because a number of companies have not provided concrete guidance on the impact of a pandemic, investors are paying attention to the impact on income from shutdowns and how quickly income will be able to recover when the world reopens.
Goldman Sachs Outlook
The Goldman Sachs earnings report is expected to be released on Wednesday, July 15, 2020. This report will be able to help share prices move higher, if these key figures are better than expectations. On the other hand, if it is below expectations, stock prices may move lower. The market estimates a decline in Goldman Sachs y/y earnings with lower earnings when reporting results for the quarter ending June 2020.
Goldman’s basic estimate for S&P 500 earnings per share in 2020 is $115, up from a previous estimate of $110. The company is maintaining its outlook for 2021 at $170 – 4% above 2019 realized levels – and predicts $188 for the year 2022.
Overall Q2 results tend to cover a wide spread in various sectors. Strategists expect losses in energy and consumer discretionary stocks, and a weak quarter from the financial sector. A stronger performance is expected from utility and technology companies.
Business conditions in the midst of the COVID-19 pandemic have had a major adverse effect on all real sectors and services. The income statement will largely determine the sustainability of changes in direct prices and future revenue expectations – is there a possibility of a positive EPS shock in Q2? As we know, Goldman Sachs reported $3,110 in EPS/Earnings Per Share for the first quarter of 2020.
Source: tradingeconomics.com
The consensus EPS estimate for this quarter has been revised 15.41% higher over the past 30 days to current levels. The investment bank is expected to post a quarterly profit of $3.84 per share in its forthcoming report, which represents a y/y change of -33.9%. Revenues are estimated at $9.33 billion, down 1.4% from last year’s quarter. This widely known consensus prospect is important in assessing the company’s revenue picture, but the strong factor that might affect its short-term share price is how the actual results compare with these estimates.
During the beginning of Q2, GS’s share price was covered by 50.0% Fib (193.67) from a peak decline of 250.06 (pre-pandemic) to a low price of 130.87. In May to early June, prices rose again to reach 76.4% Fib at 222.29. The current price position is around 205.96. Prices appear to range between the low prices of 193.60 – 222.00. A move beyond 207.76 will retest June’s high prices (222.29). On the negative side, a price that exceeds the low of 188.49 is likely to confirm a decline in the peak of 250.06 with the aim of testing the May low at 165.31.
But overall prices are still moving above the 200-day EMA.
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Ady Phangestu
Market Analyst – HF Indonesia
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