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

[behappyalways]

Otavio (Tavi) Costa@TaviCosta

Dollar strength often leads to contractions in corporate earnings globally.

Today’s inflation problem adds even further pressure on profit margins to be squeezed.

Only a matter of time before the “soft landing” narrative turns into the same old “transitory” nonsense.

https://mobile.twitter.com/TaviCosta/st ... 5113892865

[winston]

The Estimates For Q2 Are Falling, But A Bottom May Be In Sight

The outlook for Q2 earnings are trending lower and will likely move to near 0.0% by the start of the reporting session.

Nearly half of the S&P 500 (NYSEARCA: SPY) sectors have a consensus figure that is not only negative but in decline and, of the 6 left, 2 more are sitting at sub-5% growth and trending lower as well.

The leader, in terms of downward revision, is the Consumer Discretionary Sector (NYSEARCA: XLY) which has seen its consensus target fall nearly 2200 basis points since the beginning of the reporting period.

Of all the sectors, the Consumer Discretionary is most at risk of following in the tracks of Revlon although debt-heavy tech stocks and anything with the word growth attached to it are in danger as well.

On the flip side, there are four sectors that are seeing positive tailwinds in the analyst's revisions. The Energy (NYSEARCA: XLE), Real Estate (NYSEARCA: XLRE), Materials (NYSEARCA: XLB), and Industrials (NYSEARCA: XLI) sectors are expected to post growth and their targets are moving higher.

In this light, these sectors should be expected to outperform the broad market and with Energy in the lead. The Energy Sector is still doing all the heavy lifting, however, when it comes to the S&P 500 consensus figures as it is expected to post 207% YOY earnings growth, up a full 6000 basis points in just the last 2 months.

Of them all, the Energy Sector is the best positioned to outperform (based on current oil price action) as well as increase dividends, buy back shares, and other capital-returning activities.

Source: Market Beat

[winston]

The Back-Half Estimates Are On The Rise

Oddly enough, the estimates for the back half of the year have begun to rise. There are enough rays of light, we suppose, for this to make sense but we’re not ready to buy into the news yet.

To begin, the Q2 season is still ahead of us and it may be worse than we fear. In this scenario, the market will move lower before it bottoms and our targets are still well below the current price action.

To finish, the back half improvement is predicated upon supply chain improvements that may lead to bloated inventories, discounting, and margin compression.

In that scenario, the S&P 500 may bottom during the Q2 reporting period but it will be a temporary bottom. In both cases, there will be a better time to buy the market than today.

Source: Market Beat

[behappyalways]

Pomboy said that this profit proxy gauge basically plots the difference over time between two separate inflation measures—the Consumer Price Index (CPI) and the Producer Price Index (PPI)—or consumer price inflation and business input cost inflation, respectively.

A Profit Recession Is Brewing That'll Be The "Worst In 50 Years"
https://www.zerohedge.com/markets/profi ... t-50-years

[behappyalways]

Goldman Finally Admits "Large Cuts To Earnings" Are Imminent
https://www.zerohedge.com/markets/goldm ... e-imminent

[behappyalways]

Analyst Earnings Estimates Are Most Wrong During Recessions
https://www.zerohedge.com/markets/analy ... recessions

[winston]

US: 2Q Earnings

According to FactSet, the S&P 500 is expected to achieve 4.1% average earnings growth and 10.1% average sales growth in the second quarter.

Looking further out, FactSet estimates earnings growth of 10.5% in the third quarter and 9.7% earnings growth in the fourth quarter.

So, when you add it all up, analysts anticipate calendar-year earnings growth of 10.2%.

In other words, there’s no “earnings recession” in sight – and a flight to quality should light a fire under many fundamentally superior stocks…

Energy, Shipping, and some top-tier Semiconductor stocks, should report strong numbers.

Source: Investor Place

[winston]

US: 2Q Earnings

According to the latest FactSet data, second-quarter earnings on the S&P 500 are estimated to grow 4.1%.

That’s slower growth to be sure but it is far from negative.

Sales growth is expected to be 10.1%.

Source: Investor Place

[winston]

As of Friday, analysts saw aggregate annual S&P earnings growth of 5.7% for the April to June period, down from the 6.8% forecast at the beginning of the quarter, according to Refinitiv.

Source: Reuters

[winston]

2Q Earnings

The start of the second-quarter earnings season for the S&P 500 has been weaker than normal, as the number and magnitude of positive earnings and revenue surprises have been smaller than average.

As a result, there has been little improvement in the earnings and revenue growth rates for the second quarter since June 30.

Overall, 7% of the companies in the S&P 500 have reported actual results for Q2 2022 to date [as of last Friday].

Of these companies, 60% have reported actual EPS above estimates, which is below the 5-year average of 77%.

In aggregate, companies are reporting earnings that are 2.0% above estimates, which is below the 5-year average of 8.8%.

Source: Investor Place