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Barclays | U.S. Equity Strategy
5 March 2019 5
FIGURE 5
Percentage of companies beating expectations has fallen from recent multi-year highs to
a more normal level
Source: Barclays Research, Refinitiv
2019 earnings expectations continue to decline driven by
“imported” trouble
While earnings growth was always expected to decline in 2019 as the one time effects of
fiscal stimulus abate, the expected magnitude has increased substantially over the past few
months. In fact, consensus growth projections for 2019 have fallen from 10.5% in Sept, 2018,
to 7.3% in Dec, 2018, to a current level of only 3.5% EPS growth. Figure 7 calculates the
decline in consensus earnings growth projections over the same calendar months for the past
few years and we see that the decline is quite unusual. The closest comparable episode was
during 2015 and 2016 and as we discuss below this similarity is not superficial.
FIGURE 6
2019 EPS growth expectations have trended down sharply
since 3Q18
FIGURE 7
The decline in projected current year EPS from last
September to February is the strongest for 2019 since 2015
Source: Barclays Research, Refinitiv
Source: Barclays Research, Refinitiv
From another perspective, NTM earnings expectations are near post-crisis lows which also
occurred during the 2015-2016 mini-industrial recession.
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
Sept To Feb Projected Growth Change