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

[winston]

1Q Earnings

According to FactSet, 92% of S&P 500 companies have reported first-quarter results.

Generally, they were better than expected.

Peak pessimism? Maybe.

The bar was so low that 78% beat estimates – the most since Q3 2021.

Don’t break out party streamers yet, though.

Downbeat guidance has analysts expecting EPS will fall 6.3% in Q2, worse than the 2.5% decline in Q1.

Source: The Street

[winston]

1Q Earnings

At this late stage of the Q1 2023 earnings season, S&P 500 companies are recording their best performance relative to analyst expectations since Q4 2021.

Both the number of companies reporting positive EPS surprises and the magnitude of these earnings surprises are above their 10-year averages.

The index is reporting higher earnings for the first quarter relative to the end of the quarter. However, the index is still reporting a year-over-year decline in earnings for the second straight quarter.

Overall, 95% of the companies in the S&P 500 have reported actual results for Q1 2023 to date. Of these companies, 78% have reported actual EPS above estimates, which is above the 5-year average of 77% and above the 10-year average of 73%.

In aggregate, companies are reporting earnings that are 6.5% above estimates, which is below the 5-year average of 8.4% but above the 10-year average of 6.4%.

Source: Investor Place

[winston]

2Q Forecast

Overall, there are 10,981 analyst ratings on stocks in the S&P 500 for the third quarter, according to FactSet data.

Of these ratings, 54.8% are Buy ratings, 39.6% are Hold ratings, and 5.6% are Sell ratings.

Broken down by sector, analysts are most optimistic on the Energy, Communications Services, and Information Technology sectors.

Analysts are most pessimistic on the Consumer Staples sector. Retail sales have dropped recently as the purchasing power of US consumers falls from its pandemic-era levels and the economy softens.

Source: CNN Business

[winston]

US 2Q Earnings

The second-quarter earnings season will kick off next week, and right now, second-quarter S&P 500 earnings are forecast to decline an average 6.5%.

But given the fact that the analyst community has revised estimates higher, and companies often exceed estimates, I expect second-quarter earnings growth to be much better than the current forecasted 6.5% decline.

And the third and fourth quarter of 2023 are looking even better.

According to FactSet, the S&P 500 should report 0.4% average earnings growth and 1.1% average sales growth in the third quarter.

Fourth-quarter estimates are even better, with the consensus estimate calling for 7.9% average earnings growth and 3.2% average sales growth.

As a result, the S&P 500 is also expected to achieve 0.9% average earnings growth and 2.4% average sales growth in calendar year 2023.

Source: Market 360

[winston]

S&P 500 Faces Moment of Truth as Q2 Earnings Season Kicks Off Next Week

by Jesse Cohen

Analysts expect a -6.8% yearly profit decline and a decrease of -0.4% in revenue growth.

If confirmed, that would mark the third consecutive year-over-year decrease in earnings and the first drop in sales since Q2 2020.

Seven of the eleven sectors are projected to report y-o-y earnings growth, led by the Consumer Discretionary Sector (NYSE:XLY) and Communication Services Sector (NYSE:XLC) sectors.

On the other hand, four sectors are predicted to report a y-o-y decline in earnings, including the Energy Sector (NYSE:XLE), Materials Sector (NYSE:XLB), and Health Care Sector (NYSE:XLV).

Seven sectors are projected to report y-o-y revenue growth, led by the Financials and Consumer Discretionary sectors.

In contrast, four sectors are predicted to report a y-o-y decline in revenues, led by the Energy and Materials sectors.

Beyond the top-and-bottom-line numbers, investors will pay close attention to announcements on forward guidance for the year's second half, given the uncertain macroeconomic outlook, which has seen recession fears mount lately.

Other key issues likely to come up will be the health of the U.S. consumer, future hiring plans, and lingering supply-chain concerns.

Source: investing.com

https://www.investing.com/analysis/sp-5 ... -200639760

[winston]

Q2 earnings season begins this week and analysts have been doing their part to help companies beat estimates by lowering the bar

From FactSet:

Earnings Decline: For Q2 2023, the estimated earnings decline for the S&P 500 is -7.2%.

If -7.2% is the actual decline for the quarter, it will mark the largest earnings decline reported by the index since Q2 2020 (-31.6%).

Earnings Revisions: On March 31, the estimated earnings decline for Q2 2023 was -4.7%.

Seven sectors are expected to report lower earnings today (compared to Mar. 31) due to downward revisions to EPS estimates.

But if we can make it through this earnings season without too many bruises, then the analyst community is going “full bull.”

FactSet reports that, on average, industry analysts predict the S&P 500 will increase 9.3% over the next 12 months. This is even after the 15%ish gain the S&P has enjoyed so far here in 2023.

Now, while 9% gains sound good, the real question is “how evenly spread will those S&P gains be?”

As we’ve noted here in the Digest, the “Magnificent Seven” stocks and their amazing performance in 2023 has single-handedly pulled up the performance of the entire S&P Index.

Specially, without the gains of Alphabet, Microsoft, Amazon, Apple, Meta, Tesla, and Nvidia, the S&P wouldn’t be up 15% right now…it would be slightly underwater.

So, if you want that “average” forecast of a 9% S&P return over the next 12 months but you’re not concentrated in Big Tech/AI, you might be disappointed.

Source: Investor Place

[behappyalways]

Morgan Stanley forecasts 0% EPS growth for 2023
https://twitter.com/Mayhem4Markets/stat ... 9932193919

[behappyalways]

Corporate America Panics As 'Student Loan' Chatter Hits Record On Earnings Calls
https://www.zerohedge.com/markets/corpo ... ings-calls

[behappyalways]

Interest rates going up can be a benefit... it just depends on which side of the table you are on!
https://twitter.com/AyeshaTariq/status/ ... 6748582273

[winston]

Earnings estimates appear too optimistic

The consensus 2024 EPS growth rate of 12% appears too optimistic given an aging business cycle with very restrictive monetary policy, still rising cost of capital, lapping of very easy fiscal policy, eroding consumer savings and household liquidity, low unemployment rate, and increasing risk of a recession for some of the largest economies abroad (e.g., China, Germany).

Source: JPM