We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
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:
Total S&P 500 earnings for 2023 Q1 are expected to be down -10.1% from the same period last year on +1.8% higher revenues. This would follow the -5.4% decline in the preceding period’s earnings (2022 Q4) on +5.9% higher revenues.
While the direction of 2023 Q1 earnings estimates is in-line with the trend we have been seeing over the few quarters, the magnitude of negative revisions is smaller relative to what we had seen in the comparable periods for the preceding two quarters.
Sectors enjoying positive earnings growth in 2023 Q1 include Transportation (+55.6%), Aerospace (+14.9%), Energy (+4.7%), Finance (+0.8%), Industrial Products (+1.2%), and Consumer Discretionary (+17.8%).
Looking at the calendar-year picture, total S&P 500 earnings are expected to decline -3.2% on flat revenues in 2023. Excluding the Finance sector, full-year 2023 earnings would be down -6.4%.
For 2023 Q1, S&P 500 earnings are expected to decline -10.1% from the same period last year on +1.8% higher revenues.
As has been the case in recent quarters, estimates for 2023 Q1 have been steadily coming down, as the chart below shows.
Image Source: Zacks Investment Research
Please note that the magnitude of cuts to Q1 estimates is relatively modest compared to what we saw in the comparable periods for the preceding two quarters. That said, estimates have come down across the board for most sectors.
The Finance sector, which dominates the initial phase of each reporting cycle, enjoyed modest upward revisions to estimates in the first two months of the quarter, but estimates started to come down as the regional banking crisis took hold following the Silicon Valley Bank episode.
The Finance sector as a whole is expected to show +0.8% earnings growth in Q1 on +6.9% higher revenues, which would follow the -17.1% earnings decline on +3.7% higher revenues in 2022 Q4.
The Major Banks industry, which includes JPMorgan (JPM - Free Report) and Citigroup (C - Free Report) that will kick-start the Q1 reporting cycle for the group on April 14th, is expected to bring in +4.4% more earnings in the period on +13.5% higher revenues. The table below shows the Q1 earnings and revenue expectations for the Finance sector’s constituent industries.
Image Source: Zacks Investment Research
Q1 Earnings estimates for JPMorgan and Citigroup haven’t changed much, with the current $3.43 EPS estimate down a hair from $3.44 on March 17th but up from $3.42 on January 13th. The current JPM estimate for full-year 2023 has modestly come down, as the chart below shows.
Image Source: Zacks Investment Research
While Q1 EPS estimates for JPMorgan and Citigroup haven’t moved much, the same for First Republic have literally fallen off a cliff, as the chart below shows.
Image Source: Zacks Investment Research
The First Republic example is by no means representative of the broader regional banks space, but it does go on to show that the profitability picture for parts of the regional banks industry has really taken a hit in the wake of the Silicon Valley development.
The big money-center banks like JPMorgan and Citigroup will enjoy strong net-interest income growth as a result of growing loan portfolios and expanded margins. But those gains will mostly get offset by weakness in investment banking and other fee activities. Credit quality still remains favorable by historical standards, though delinquencies are bound to increase as the economic cycle turns down. Some of that will show up in provisions for loan losses in these quarterly reports, as it did in the preceding quarterly reporting cycle.
The Earnings Big Picture
The chart below shows the evolution of aggregate earnings estimates for 2023 since the start of 2022.
Image Source: Zacks Investment Research
As noted earlier, the current aggregate earnings total for the index approximates to an index ‘EPS’ of $213.78, down from $242.98 in mid-April, 2022.
The chart below tracks these index ‘EPS’ values since the start of 2022. Please note that these ‘EPS’ values are imputed approximations and have been previously published on the dates listed in the chart below.
Image Source: Zacks Investment Research
The chart below provides a big-picture view of earnings on a quarterly basis. The growth rate for Q4 is on a blended basis, where the actual reports that have come out are combined with estimates for the still-to-come companies.
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture on an annual basis.
Image Source: Zacks Investment Research
As mentioned earlier, 2023 aggregate earnings estimates on an ex-Energy basis are already down by more than -14% since mid-April 2022. Perhaps we see a bit more downward adjustments to estimates over the coming weeks after more companies report quarterly results and provide guidance. But we have nevertheless already covered some ground in taking estimates to a fair or appropriate level.
This is particularly so if whatever economic downturn lies ahead proves to be more of the garden variety rather than the last two such events. Recency bias forces us to use the last two economic downturns, which were also among the nastiest in recent history, as our reference points. But we need to be cautious against that natural tendency as the economy’s foundations at present remain unusually strong.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Bank Earnings Looming: What Can Investors Expect?
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:
For 2023 Q1, S&P 500 earnings are expected to decline -10.1% from the same period last year on +1.8% higher revenues.
As has been the case in recent quarters, estimates for 2023 Q1 have been steadily coming down, as the chart below shows.
Image Source: Zacks Investment Research
Please note that the magnitude of cuts to Q1 estimates is relatively modest compared to what we saw in the comparable periods for the preceding two quarters. That said, estimates have come down across the board for most sectors.
The Finance sector, which dominates the initial phase of each reporting cycle, enjoyed modest upward revisions to estimates in the first two months of the quarter, but estimates started to come down as the regional banking crisis took hold following the Silicon Valley Bank episode.
The Finance sector as a whole is expected to show +0.8% earnings growth in Q1 on +6.9% higher revenues, which would follow the -17.1% earnings decline on +3.7% higher revenues in 2022 Q4.
The Major Banks industry, which includes JPMorgan (JPM - Free Report) and Citigroup (C - Free Report) that will kick-start the Q1 reporting cycle for the group on April 14th, is expected to bring in +4.4% more earnings in the period on +13.5% higher revenues. The table below shows the Q1 earnings and revenue expectations for the Finance sector’s constituent industries.
Image Source: Zacks Investment Research
Q1 Earnings estimates for JPMorgan and Citigroup haven’t changed much, with the current $3.43 EPS estimate down a hair from $3.44 on March 17th but up from $3.42 on January 13th. The current JPM estimate for full-year 2023 has modestly come down, as the chart below shows.
Image Source: Zacks Investment Research
While Q1 EPS estimates for JPMorgan and Citigroup haven’t moved much, the same for First Republic have literally fallen off a cliff, as the chart below shows.
Image Source: Zacks Investment Research
The First Republic example is by no means representative of the broader regional banks space, but it does go on to show that the profitability picture for parts of the regional banks industry has really taken a hit in the wake of the Silicon Valley development.
The big money-center banks like JPMorgan and Citigroup will enjoy strong net-interest income growth as a result of growing loan portfolios and expanded margins. But those gains will mostly get offset by weakness in investment banking and other fee activities. Credit quality still remains favorable by historical standards, though delinquencies are bound to increase as the economic cycle turns down. Some of that will show up in provisions for loan losses in these quarterly reports, as it did in the preceding quarterly reporting cycle.
The Earnings Big Picture
The chart below shows the evolution of aggregate earnings estimates for 2023 since the start of 2022.
Image Source: Zacks Investment Research
As noted earlier, the current aggregate earnings total for the index approximates to an index ‘EPS’ of $213.78, down from $242.98 in mid-April, 2022.
The chart below tracks these index ‘EPS’ values since the start of 2022. Please note that these ‘EPS’ values are imputed approximations and have been previously published on the dates listed in the chart below.
Image Source: Zacks Investment Research
The chart below provides a big-picture view of earnings on a quarterly basis. The growth rate for Q4 is on a blended basis, where the actual reports that have come out are combined with estimates for the still-to-come companies.
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture on an annual basis.
Image Source: Zacks Investment Research
As mentioned earlier, 2023 aggregate earnings estimates on an ex-Energy basis are already down by more than -14% since mid-April 2022. Perhaps we see a bit more downward adjustments to estimates over the coming weeks after more companies report quarterly results and provide guidance. But we have nevertheless already covered some ground in taking estimates to a fair or appropriate level.
This is particularly so if whatever economic downturn lies ahead proves to be more of the garden variety rather than the last two such events. Recency bias forces us to use the last two economic downturns, which were also among the nastiest in recent history, as our reference points. But we need to be cautious against that natural tendency as the economy’s foundations at present remain unusually strong.