Are profits and dividends provisional forecast figures? Mr. Hiroshi Koya

A bit of a surprise.

On Saturday, on Nikkei's "Market Overview 1" page, there appeared the following "notice" article.

"Due to the spread of the novel coronavirus, many companies are postponing disclosure of earnings forecasts, and the creation of Nikkei's forecast is taking time. While forecasts cannot be prepared, the system is treating profits and dividends as zero, so P/E ratios and dividend yields are abnormal."




That was the gist.
For a long time, it has been widely known that Nikkei does not have its own forecasts, and that forecast figures use the numbers disclosed by the companies, but I did not expect it to come to this.

For the time being, the market-wide forecast P/E and forecast dividend yield will not be meaningful as indicators.

As a second-best measure, we estimate from trailing P/E.

As of yesterday, the Nikkei Average's trailing earnings per share were 1,578 yen, and as trailing EPS this is
the lowest in two years since 2018-05-08 (1,566 yen). There are also concerns that actual results may be revised downward further.
This year's profits are expected to be down by about 50% versus actuals. Based on actual results, the forecast EPS would be
789 yen, not far from the weekend's provisional figure of 728 yen. Even if the profits of unreported companies are set to zero,
it's not exact, but not far off.

For the time being, using actual EPS as a baseline, 50% is a rough gauge of this year's expected decline, but
in any case, earnings are not going to be a factor that drives stock prices higher.

2020/05/17 07:25 Published