By Philip van Doorn, MarketWatch
It isn’t unusual for companies to reduce their guidance heading into earnings season. Wall Street analysts will follow suit by cutting their own estimates, setting up ubiquitous “earnings beats.”
After an excellent 2018 for sales, and especially earnings, increases (brought about in great part by the significant cut in federal corporate income-tax rates), analysts expect much slower increases in 2019.
Here are consensus estimates for increases in sales and earnings for the S&P 500 Index /zigman2/quotes/210599714/realtime SPX +0.30% :
|Estimated sales increase - 2019||Estimated sales increase - 2018||Estimated EPS increase - 2019||Estimated EPS increase - 2018|
Again, it is important to keep in mind that the cut in the maximum federal corporate income-tax rate to 21% from 35% alone would raise earnings subject to the highest rate increase by 21.5%. That’s a big one-time boost.
Fourth-quarter earnings season is in full swing, but MarketWatch’s Tomi Kilgore looked ahead and pointed out that analysts have been continuing to cut their first-quarter earnings estimates for the S&P 500 as a whole. This, of course, is happening for scores of individual companies as well. But any company’s quarterly earnings can be skewed in any quarter because of one-time accounting charges, reporting changes, legal settlements or other types of one-time events.
So things are different this year, and it is probably more of a revelation to review sales rather than earnings.
Here are the 20 S&P 500 companies whose first-quarter sales estimates have been cut the most by analysts over the past month:
|Company||Ticker||Type||Estimated sales - first calendar quarter, 2019||Estimated sales - first calendar quarter, 2019 - one month ago||Decline in sales estimate for first calendar quarter of 2019||Estimated change in quarterly sales from first calendar, 2018|
|Phillips 66||/zigman2/quotes/207448059/composite PSX||Oil Refining/ Marketing||$24,073||$28,192||-14.6%||1.0%|
|Lennar Corp. Class A||/zigman2/quotes/202536373/composite LEN||Homebuilding||$4,035||$4,689||-13.9%||35.8%|
|ConocoPhillips||/zigman2/quotes/207605056/composite COP||Oil & Gas Production||$8,133||$9,271||-12.3%||-10.3%|
|Marathon Oil Corp.||/zigman2/quotes/205031829/composite MRO||Oil & Gas Production||$1,238||$1,409||-12.2%||-29.6%|
|Valero Energy Corp.||/zigman2/quotes/200735463/composite VLO||Oil Refining/ Marketing||$24,794||$28,126||-11.8%||-6.2%|
|Marathon Petroleum Corp.||/zigman2/quotes/209634297/composite MPC||Oil Refining/ Marketing||$33,027||$37,413||-11.7%||62.0%|
|Apache Corp.||/zigman2/quotes/200648444/composite APA||Oil & Gas Production||$1,641||$1,858||-11.7%||-5.0%|
|HollyFrontier Corp.||/zigman2/quotes/201783514/composite HFC||Oil Refining/ Marketing||$4,190||$4,701||-10.9%||1.5%|
|Oneok Inc.||/zigman2/quotes/205201756/composite OKE||Oil & Gas Pipelines||$3,447||$3,860||-10.7%||11.1%|
|Newfield Exploration Co.||Oil & Gas Production||$582||$647||-10.0%||3.7%|
|EOG Resources Inc.||/zigman2/quotes/204634330/composite EOG||Oil & Gas Production||$3,448||$3,818||-9.7%||-7.1%|
|Anadarko Petroleum Corp.||Integrated Oil||$3,014||$3,321||-9.2%||-0.6%|
|Concho Resources Inc.||/zigman2/quotes/208942254/composite CXO||Oil & Gas Production||$1,138||$1,247||-8.7%||20.1%|
|T. Rowe Price Group||/zigman2/quotes/203200152/composite TROW||Investment Managers||$1,224||$1,334||-8.3%||-7.3%|
|Constellation Brands Inc. Class A||/zigman2/quotes/207737284/composite STZ||Beverages: Alcoholic||$1,725||$1,880||-8.3%||-2.3%|
|Apple Inc.||/zigman2/quotes/202934861/composite AAPL||Telecom. Equipment and Computers||$59,335||$64,015||-7.3%||-2.9%|
|Cimarex Energy Co.||/zigman2/quotes/205517948/composite XEC||Oil & Gas Production||$591||$637||-7.3%||4.1%|
|Hess Corp.||/zigman2/quotes/203832174/composite HES||Oil & Gas Production||$1,427||$1,531||-6.8%||1.3%|
|Devon Energy Corp.||/zigman2/quotes/209479244/composite DVN||Oil & Gas Production||$1,324||$1,421||-6.8%||-65.5%|
|Noble Energy Inc.||/zigman2/quotes/210375673/composite NBL||Oil & Gas Production||$1,095||$1,171||-6.4%||-12.0%|
You can click the tickers for more about each company, including news, additional estimates, consensus ratings and price targets and price ratios.
Here are the 20 that analysts expect to show the largest declines in first-quarter sales from a year earlier.
|Company||Ticker||Industry||Estimated change in quarterly sales from first calendar quarter, 2018||Estimated sales - first calendar quarter, 2019||Estimated sales - first calendar quarter, 2019 - one month ago||Change in sales estimate for first calendar quarter of 2019|
|Devon Energy Corp.||/zigman2/quotes/209479244/composite DVN||Oil & Gas Production||-65.5%||$1,324||$1,421||-6.8%|
|Pentair PLC||/zigman2/quotes/208874493/composite PNR||Misc. Manufacturing||-41.5%||$743||$742||0.1%|
|Newell Brands Inc||/zigman2/quotes/209507510/composite NWL||Industrial Conglomerates||-40.3%||$1,799||$1,803||-0.2%|
|Marathon Oil Corp.||/zigman2/quotes/205031829/composite MRO||Oil & Gas Production||-29.6%||$1,238||$1,409||-12.2%|
|Western Digital Corp.||/zigman2/quotes/204213617/composite WDC||Computer Peripherals||-22.5%||$3,883||$3,962||-2.0%|
|Freeport-McMoRan Inc.||/zigman2/quotes/200215692/composite FCX||Precious Metals||-22.5%||$3,775||$3,945||-4.3%|
|Micron Technology Inc.||/zigman2/quotes/205710729/composite MU||Semiconductors||-18.7%||$5,978||$6,055||-1.3%|
|Applied Materials Inc.||/zigman2/quotes/209393259/composite AMAT||Electronic Production Equipment||-18.0%||$3,745||$3,765||-0.5%|
|Franklin Resources Inc.||/zigman2/quotes/201997162/composite BEN||Investment Managers||-15.8%||$1,359||$1,446||-6.0%|
|Lam Research Corp.||/zigman2/quotes/208077897/composite LRCX||Electronic Production Equipment||-15.1%||$2,456||$2,491||-1.4%|
|DXC Technology Co.||/zigman2/quotes/200279350/composite DXC||Data Processing Services||-14.7%||$5,369||$5,365||0.1%|
|Affiliated Managers Group Inc.||/zigman2/quotes/209583132/composite AMG||Investment Managers||-14.3%||$525||$554||-5.2%|
|Honeywell International Inc.||/zigman2/quotes/205583690/composite HON||Industrial Conglomerates||-13.8%||$8,963||$8,863||1.1%|
|Dover Corp.||/zigman2/quotes/208444467/composite DOV||Misc. Manufacturing||-13.4%||$1,664||$1,675||-0.7%|
|Nvidia Corp.||/zigman2/quotes/200467500/composite NVDA||Semiconductors||-12.4%||$2,809||$2,827||-0.6%|
|Noble Energy Inc.||/zigman2/quotes/210375673/composite NBL||Oil & Gas Production||-12.0%||$1,095||$1,171||-6.4%|
|Johnson Controls International PLC||/zigman2/quotes/203776087/composite JCI||Misc. Commercial Services||-11.9%||$6,588||$6,589||0.0%|
|Exelon Corp.||/zigman2/quotes/205982254/composite EXC||Electric Utilities||-11.8%||$8,633||$8,713||-0.9%|
|Seagate Technology PLC||/zigman2/quotes/201824240/composite STX||Computer Peripherals||-11.8%||$2,472||$2,495||-0.9%|
|Fifth Third Bancorp||/zigman2/quotes/207561596/composite FITB||Regional Banks||-10.7%||$1,703||$1,767||-3.6%|
These lists can be useful as starting points for research. But it is important if you are considering a company for investment, or a stock to sell short, to do plenty of research. (And if you are considering selling a stock short, think twice, unless you are a professional investor, as I wrote in 2015.) There might be a reasonable or even a good explanation for a decline in sales. Commodity prices are an obvious problem or opportunity, depending on the circumstances. But companies sell or spin off business units frequently, which, of course, lowers their sales.
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