Members Looking for Clarity in First-Quarter Earnings Reports

As earnings season kicks off, this week’s Sentiment Survey special question asked AAII members what information they will be looking for companies to provide when they report first-quarter earnings. More than one out of three respondents (36%) say that they will specifically be looking for 2020 guidance. Many within this group note that a number of companies have retracted previously issued guidance and they are anticipating that these same companies will issue updated expectations for the year. About 25% of respondents will be looking for updates on how the coronavirus pandemic is impacting each company’s business and what response they will have. Other information that AAII members will be looking for includes debt levels/overall balance sheet health (named by 15% of respondents), solid levels of free cash flow (12%) and dividend stability (11%).

Here is a sampling of the responses: 

• “Besides obvious financials and earnings forecasts, what percent of their workforce is idled and when they expect to be back at full operations.”
• “A lot of focus on balance sheet health and adequacy of cash reserves, including dividend protection. Additionally, the expected outlook for the second half of the year.”
• “Some will actually have earnings while others will need to talk about how they plan to get through to the other side. It will be interesting to hear the comments from management about how confident they are going forward.”
• “None. Until we get past this situation, reports are just additional noise. It will be hard to discern anything from the reports. And as soon as things get closer to normal, it will all change.”

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