As tariffs spark worries of a global recession against the backdrop of earnings season this week, Wall Street is bracing for companies to either revise their guidance or, worse — pull it altogether.
Delta (DAL), the first airline out of the gate with first quarter results on Wednesday, did not affirm its full-year forecast, citing headwinds from the economic uncertainty surrounding the trade war.
“They pulled their guidance, which I think we’re going to see a lot of in this earnings season because the reality is that everything is so policy dependent, and companies aren’t going to be able to provide high conviction guidance,” said Michael Kantrowitz, Piper Sandler’s chief investment officer.
Kantrowitz said first quarter performance will be “old news” for investors coming into this earnings season as they try to evaluate how much a stock is worth. The market is coming in with “super low expectations” and will be looking for early signs of any impact from escalating tariffs on corporate earnings.
“The issue with valuation is that if the earnings outlook is uncertain — and it is literally getting more uncertain by the day — then you can’t really trust that valuation,” Kantrowitz said.
In an interview with Yahoo Finance Delta Air Lines CEO Ed Bastian noted that “the level of uncertainty that we’re facing coming out of the global trade discussions and skirmishes is a bit unprecedented.”
He said that the company has a “pretty good line of sight” for the next 60 to 90 days. But “beyond that, it’s a bit murky. And it would not be responsible to try to give an estimate in light of such uncertainty.”
Meanwhile, on Wednesday morning Walmart (WMT) reaffirmed its full-year profit outlook and first quarter sales growth. But the retail giant said the range for possible operating profit growth outcomes for the quarter had widened because of tariffs. The company didn’t specify by how much, but in February it estimated an increase of 0.5% to 2%.
“The range of outcomes for Q1 operating income growth has widened due to less favorable category mix, higher casualty claims expense and the desire to maintain flexibility to invest in price as tariffs are implemented,” Walmart noted in a press release on Wednesday morning.
Shares of the retailer jumped 5% on Wednesday during a market rebound.
“What I’m going to be looking for in the earnings season is maybe less about what companies are saying and more how are these stocks act, especially some of these ones that have been really beaten up in retail or some of these areas that really have been walloped,” Truist co-chief investment officer Keith Lerner told Yahoo Finance.
