Earnings (General News) 02 (Oct 16 - Dec 25)

[behappyalways]

Companies are sending out warnings about fourth quarter retail spending.
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[behappyalways]

Borrowing costs have risen sharply over the last year for S&P 500 companies, per Goldman
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[winston]

2023 Earnings

The S&P 500 index are on track to report year-on-year EPS growth of 7.1% on Sales growth of 1.5%.

EPS fell 2.8% in the second quarter, so this is a significant turnaround.

Source: Simply Wall Street

[winston]

2024 Earnings

FactSet currently forecasts the S&P 500 will achieve full-year 2024 earnings growth of 11.7%, with first- and second-quarter earnings growth of 6.8% and 10.9%, respectively.

[behappyalways]

When looking at the top 3,000 publicly listed U.S. stocks, 25% currently have interest payments GREATER than cash flow from operations.
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[behappyalways]

As the stock market rips in this Santa rally, nobody seems to have noticed that since the end of September, Q4 EPS estimates have been trimmed more than -5% and 2024 by -1%. Then again, who needs fundamentals when you have seasonals, momentum and a dovish Fed as tailwinds?
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[behappyalways]

This is one reason why $IWM is such a crowded short for hedge funds. It is an index full of garbage that will struggle more in an elevated rate environment.
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[winston]

US 4Q Earnings

We started Q4 with expectations of 8% year-over-year earnings growth. That has now been revised down to just 1.3% growth.

The analyst community continues to undershoot on earnings and undershoot on economic growth. So once again, we head into earnings season with a setup for positive surprises.

The yearly change in the motor vehicle insurance component of CPI (for November) was up 19.2%. From pre-covid levels, it was up 35%.

Guess which industry is expected to be the largest contributor of positive earnings growth in Q4? Insurance.

Insurance companies are expected to have grown earnings by 26% over the past year.

Source: Forbes

[behappyalways]

Global EPS growth estimates: While IT and Telecom are expected to lead, Healthcare is expected to see the biggest recovery.
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[winston]

US 4Q Earnings

As of last Friday, 25% of the S&P had reported Q4 earnings.

For how they’re shaping up, let’s turn to FactSet, which is the go-to earnings data analytics group used by the pros:

For Q4 2023, the blended (year-over-year) earnings decline for the S&P 500 is -1.4%.

If -1.4% is the actual decline for the quarter, it will mark the fourth time in the past five quarters that the index has reported a year-over-year decline in earnings.

At this stage of the fourth quarter earnings season, the overall performance of the S&P 500 continues to be subpar.

The percentage of S&P 500 companies reporting positive earnings surprises is below average, while companies are reporting actual earnings that are below estimates in aggregate.

Now, this earnings season will certainly lead to some shorter-term volatility, but the more influential factor on your portfolio is where earnings go in 2024. FactSet pegs the S&P’s 2024 full-year earnings growth at 11.6%.

Source: Investor Place