Earnings Insight: 2023 Q1

Estimates

https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_040623.pdf

Analysts and companies have been more pessimistic in their earnings outlooks for the first quarter compared to historical averages. The index is now expected to report its largest year-over-year decline in earnings since Q2 2020.

• The S&P 500 is expected to report a (year-over-year) earnings decline of -6.8%, compared to the estimated (year-over-year) earnings decline of -0.3% on December 31. If -6.8% is the actual decline for the quarter, it will mark the largest earnings decline reported by the index since Q2 2020 (-31.8%).
• The S&P 500 is expected to report (year-over-year) revenue growth of 1.8%. If 1.8% is the actual growth rate for the quarter, it will mark the lowest revenue growth rate reported by the index since Q3 2020 (-1.1%).
• For Q1 2023 and Q2 2023, analysts are projecting earnings declines of -6.8% and -4.6%, respectively. For Q3 2023 and Q4 2023, analysts are projecting earnings growth of 2.1% and 9.0%, respectively.
• The forward 12-month P/E ratio is 18.0, which is below the 5-year average (18.5) but above the 10-year average (17.3).
• The estimated net profit margin for the S&P 500 for Q1 2023 is 11.2%, which is below the previous quarter’s net profit margin of 11.3%, below the 5-year average of 11.4% and below the year-ago net profit margin of 12.2%.

April 14 Update

https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_041423.pdf?hsCtaTracking=31d0f488-5c02-4193-b93b-f1708067f4fa%7Cb994622e-6b82-4c98-ad34-76c848088314

At this very early stage, the first quarter earnings season for the S&P 500 is off to a strong start. Both the number of positive earnings surprises and the magnitude of these earnings surprises are above their 10-year averages

• For Q1 2023 (with 6% of S&P 500 companies reporting actual results), 90% of S&P 500 companies has reported a positive EPS surprise and 63% of S&P 500 companies have reported a positive revenue surprise.

• For Q1 2023, the blended earnings decline for the S&P 500 is -6.5%. If -6.5% is the actual decline for the quarter, it will mark the largest earnings decline reported by the index since Q2 2020 (-31.6%). On March 31, the estimated earnings decline for Q1 2023 was -6.7%.
• The blended revenue growth rate for the first quarter is 2.0% today, compared to a revenue growth rate of 1.8% last week and a revenue growth rate of 1.9% at the end of the first quarter (March 31).
• Companies that have reported positive earnings surprises for Q1 2023 have seen an average price increase of +3.1% two days before the earnings release through two days after the earnings release.
• Companies that have reported negative earnings surprises for Q1 2023 have seen an average price decrease of -2.4% two days before the earnings release through two days after the earnings
• Positive earnings surprises reported by companies in the Financials sector were the largest contributor to the decrease in the overall earnings decline during the past week.