Wall Street analysts don’t expect S&P 500 companies to blow the doors off with their fourth-quarter earnings reports when they start coming out in January.
Fourth-quarter profits for S&P 500 companies are expected to fall 2.8%, according to new data from FactSet. If true, it would mark the first earnings decline reported by the S&P 500 since the third quarter of 2020, when earnings fell 5.7%.
Expectations have already started to fall for corporate earnings, according to FactSet data. Earnings per share estimates for the fourth quarter have fallen 6.1% since September 30.
“Slower nominal activity means less revenue growth and downward pressure on margins,” wrote Search 22V founder Dennis DeBusschere in a client note. “At the same time, management sentiment towards forward earnings, measured with natural language processing tool Amenity, has turned deeply negative. The long-awaited earnings decline has arrived.”
Despite a long list of reasons – with the aforementioned earnings weakness leading the way – to be cautious about stocks in the impending earnings season, analysts continue to remain bullish with their ratings.
There are 10,835 ratings on S&P 500 stocks, FactSet points out. Of these 10,835 ratings, 55.3% are buy ratings, 38.8% are hold ratings and 5.9% are sell ratings.
But a few S&P 500 stocks that have sell ratings – suggesting analysts really don’t care about these stories.
Companies such as Principal Financial Group, T. Rowe Price Group and ConEd have more than 50% of analysts covering them who rate the stock as a sell.
So, as investors look to bounce back from a tough year in the markets, these are a few names that Wall Street is least convinced will help turn the tide for your portfolio.