Earnings season kicks off next week in the U.S., and then Canadian companies will start unveiling their numbers with the usual lag of a few weeks.
We discussed the fact that the rate of change decline for U.S. earnings and revenue will be dramatic because the fiscal and monetary-induced boom last year at this time is impossible to replicate.
What follows, courtesy of Morgan Stanley, is a visual representation of that with some excellent charts detailing quarterly and year-over-year earnings per share and revenue estimates, and a breakdown by sector.
Find out what’s expected on the earnings front over the next few weeks because it will go a long way in determining how well stocks hold up as the Fed raises interest rates and reduces its balance sheet.
The 1Q22 earnings cycle kicks off next week and 75% of the SPX market cap is expected to report earnings over the next four weeks.
Expectations for 1Q numbers are for 5.4% year-over-year (y/y) earnings growth at the index level.
Estimates for 2022 y/y growth are firmly below 2021 growth numbers, as base effects normalize and macro risks grow (inflation, rate hikes, Ukraine).
Yet, consensus continues to build in growth acceleration to quarterly 2022 estimates as the year progresses.
The result: guidance and companies re-affirming out-quarter numbers will be closely watched.
For the full 2022 year, expectations are for index earnings per share (EPS) at ~$227, a 9% increase relative to 2021.
Next week, the bulk of the early reports will come from Financials.
Betsy Graseck downgraded Banks last week given credit concerns and yield curve inversion, in addition to slower capital markets activity at money-centre banks.
- SPX 1Q22 Quarterly EPS Growth YoY = +5.4%
- SPX 1Q22 Quarterly Revenue Growth YoY = +9.3%
- Best Y/Y Growth = Energy +246% EPS growth, Energy +42% revenue growth
- Worst Y/Y Growth = Financials -24% EPS decline, Utilities -1% revenue growth
- Biggest Reporting Week = The Week of April 25th
Quarterly revenue growth in the first quarter is expected to increase 9.3% y/y, driven primarily by a jump in Energy, but also notably Healthcare and Industrials.
Utilities is expected to post a decrease in revenue quarter-over-quarter (q/q), while Financials and Materials are expected to see the smallest full-year revenue growth.
On an index-level, full-year expectations are for +8.5% in revenue growth for the SPX.
4Q21 Earnings Calendar:
The calendar below shows the expected percent of companies in the S&P reporting each week during this earnings season.
The busiest week of reporting will be April 25th, when 42% of SPX will report.
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