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Pressure on Earnings Estimates: What Sectors are Most Impacted?
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Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
Earnings growth was all along expected to decelerate in the current and coming periods on account of tough comparisons, but macroeconomic headwinds are adding to the moderating growth outlook.
Total S&P 500 earnings for the first quarter of 2022 are expected to be up +3.8% from the same period last year on +10.0% higher revenues. This would follow the +32.2% growth in earnings on +15.5% growth in revenues in 2021 Q4.
Looking at the calendar-year picture for the S&P 500 index, earnings increased +49.9% in 2021, and are projected to climb +7.4% in 2022 and +9.6% in 2023. This would follow the -12.9% earnings decline in 2020.
The overall earnings picture has been very strong lately, with the growth rates and the absolute dollar totals at very high levels. The growth pace decelerates significantly in the coming periods, as you can see in the chart below that provides a big-picture view of earnings on a quarterly basis.
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture on an annual basis, with the growth momentum expected to continue.
Image Source: Zacks Investment Research
Looking at the revisions trend in the aggregate, estimates are still going up, though only modestly so. There are plenty of cross currents once we look at the revisions trend at the granular level, with rising estimates in a few sectors offsetting estimate cuts in others.
In fact, estimates have been going down for 9 of the 16 Zacks sectors since the start of the year, with the biggest declines in the Consumer Discretionary, Utilities, Transportation, and Conglomerates sectors. Offsetting these negative estimate revisions to full-year 2022 estimates, are rising estimates for the Energy, Construction and Autos sectors.
Hilton Worldwide (HLT - Free Report) and Las Vegas Sands (LVS - Free Report) are examples of Consumer Discretionary operators that have suffered estimate cuts lately. Examples from other sectors on the negative revisions side include Southwest (LUV - Free Report) in the Transportation sector and General Electric (GE - Free Report) in the Conglomerates sector.
Energy sector estimates had been going up as a result of rising oil prices, even before the Ukraine situation and we can see this within all of the major players in the sector. Estimates in the Construction and Auto sectors have been going up lately as well.
There is a rising degree of uncertainty about the outlook, being driven by a lack of macroeconomy visibility. The Ukraine situation appears to be exacerbating pre-existing supply-chain issues, which combined with its impact on oil prices, is weighing on the inflation situation in hard-to-predict ways. The evolving earnings revisions trend will reflect this macro backdrop.
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Pressure on Earnings Estimates: What Sectors are Most Impacted?
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
The overall earnings picture has been very strong lately, with the growth rates and the absolute dollar totals at very high levels. The growth pace decelerates significantly in the coming periods, as you can see in the chart below that provides a big-picture view of earnings on a quarterly basis.
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture on an annual basis, with the growth momentum expected to continue.
Image Source: Zacks Investment Research
Looking at the revisions trend in the aggregate, estimates are still going up, though only modestly so. There are plenty of cross currents once we look at the revisions trend at the granular level, with rising estimates in a few sectors offsetting estimate cuts in others.
In fact, estimates have been going down for 9 of the 16 Zacks sectors since the start of the year, with the biggest declines in the Consumer Discretionary, Utilities, Transportation, and Conglomerates sectors. Offsetting these negative estimate revisions to full-year 2022 estimates, are rising estimates for the Energy, Construction and Autos sectors.
Hilton Worldwide (HLT - Free Report) and Las Vegas Sands (LVS - Free Report) are examples of Consumer Discretionary operators that have suffered estimate cuts lately. Examples from other sectors on the negative revisions side include Southwest (LUV - Free Report) in the Transportation sector and General Electric (GE - Free Report) in the Conglomerates sector.
Energy sector estimates had been going up as a result of rising oil prices, even before the Ukraine situation and we can see this within all of the major players in the sector. Estimates in the Construction and Auto sectors have been going up lately as well.
There is a rising degree of uncertainty about the outlook, being driven by a lack of macroeconomy visibility. The Ukraine situation appears to be exacerbating pre-existing supply-chain issues, which combined with its impact on oil prices, is weighing on the inflation situation in hard-to-predict ways. The evolving earnings revisions trend will reflect this macro backdrop.