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Chicago, IL – October 21, 2021 – Zacks Director of Research Sheraz Mian says, “Total earnings and revenues are up +35.3% and +12.9%, respectively from the same period last year, with 87.0% beating EPS estimates and 72.5% beating revenue estimates."
A Strong Earnings Picture Amid Global Headwinds
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 the 69 S&P 500 members that have reported Q3 results through Wednesday, October 20th, total earnings and revenues are up +35.3% and +12.9%, respectively from the same period last year, with 87.0% beating EPS estimates and 72.5% beating revenue estimates. The proportion of these 69 index members beating both EPS and revenue estimates is 66.7%.
The Q3 earnings and revenue growth rates and the EPS and revenue beats percentages for these 69 index members is below what we saw for the same group of companies in the preceding period, but it is nevertheless above historical averages.
Looking at Q3 as whole, total S&P 500 earnings are expected to be up +30.3% from the same period last year on +14.1% higher revenues. This would follow the +95.0% earnings growth on +25.3% higher revenues in Q2.
Rising cost pressures amid supply-chain disruptions and labor/material shortages will keep the spotlight on margins, which are expected to be up year-over-year as well as sequentially in Q3. The margins trajectory over the coming periods is a key source of uncertainty in the earnings outlook given the lack of visibility with respect to the duration of inflationary pressures.
Total S&P 500 earnings for the current period (2021 Q4) are expected to be up +21.1% from the same period last year on +10.8% higher revenues. Importantly, estimates have started going up, though the pace and magnitude of positive revisions are still relatively on the weak side.
Looking at the calendar-year picture for the S&P 500 index, earnings are projected to climb +43.5% on +11.4% higher revenues in 2021 and increase +9.0% on +6.8% higher revenues in 2022. This would follow the -13.0% earnings decline on -1.7% lower revenues in 2020.
For the small-cap S&P 600 index, we now have Q3 results from 25 index members or 4.2% of the index’s total membership. Total earnings for these 25 index members are up +17.5% on +3.5% higher revenues, with 80% beating EPS estimates and 68% beating revenue estimates.
Looking at Q3 as a whole for the small-cap index, total earnings are expected to be up +44.4% on +16.1% higher revenues, which would follow the +280.0% earnings growth on +34.4% higher revenues in 2021 Q2.
The implied ‘EPS’ for the S&P 500 index, calculated using the current 2021 P/E of 23.2X and index close, as of October 19th, is $194.74, up from $135.68 in 2020. Using the same methodology, the index ‘EPS’ works out to $211.18 for 2022 (P/E of 21.3X) and $233.54 in 2023 (P/E of 19.4X). The multiples have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.
Procter & Gamble (PG - Free Report) and Brinker International (EAT - Free Report) became the latest companies to cite rising input costs and supply-chain bottlenecks while discussing underlying business trends. We heard about similar issues from Nike (NKE - Free Report) , McCormick (MKC - Free Report) , FedEx (FDX - Free Report) and others earlier in the Q3 reporting cycle.
The rising cost of inputs and labor has emerged as the most important macroeconomic development that has implications not only for corporate margins but also for Fed policy. Whether these inflationary trends turn out to be a passing phenomenon or something more enduring will determine durable earnings trends.
Margin expectations embedded in current consensus earnings and revenue estimates suggest some pressures.
But this is expected to be nothing more than a temporary speed bump. This becomes clear in the annual margins picture.
We remain positive in our earnings outlook, as we see the overall growth picture steadily improving, as the near-term logistical issues get addressed.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: Procter & Gamble, Brinker International, Nike, McCormick and FedEx
For Immediate Release
Chicago, IL – October 21, 2021 – Zacks Director of Research Sheraz Mian says, “Total earnings and revenues are up +35.3% and +12.9%, respectively from the same period last year, with 87.0% beating EPS estimates and 72.5% beating revenue estimates."
A Strong Earnings Picture Amid Global Headwinds
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:
Procter & Gamble (PG - Free Report) and Brinker International (EAT - Free Report) became the latest companies to cite rising input costs and supply-chain bottlenecks while discussing underlying business trends. We heard about similar issues from Nike (NKE - Free Report) , McCormick (MKC - Free Report) , FedEx (FDX - Free Report) and others earlier in the Q3 reporting cycle.
The rising cost of inputs and labor has emerged as the most important macroeconomic development that has implications not only for corporate margins but also for Fed policy. Whether these inflationary trends turn out to be a passing phenomenon or something more enduring will determine durable earnings trends.
Margin expectations embedded in current consensus earnings and revenue estimates suggest some pressures.
But this is expected to be nothing more than a temporary speed bump. This becomes clear in the annual margins picture.
We remain positive in our earnings outlook, as we see the overall growth picture steadily improving, as the near-term logistical issues get addressed.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.