The most recent estimate of the S&P 500 Index’s annual 2022 and 2023 earnings can serve as a baseline as we enter the reporting period for third-quarter earnings.
According to FactSet, the estimated third-quarter earnings growth rate for the S&P 500 is 2.4%, which if realized would be the lowest earnings growth rate for the index since the third quarter of 2020 (-5.7%). S&P forecasts that its index earnings per share will decline in 2022 and grow modestly in 2023, with an expectation of earnings per share of $47.33 in the third quarter. This would be well short of the consensus estimate of $55.75 and more pessimistic than the consensus view of broadly unchanged full-year earnings for 2022 and faster growth in 2023.
The most recent weekly report of earnings expectations for the S&P 500 in 2022 showed a drop of 52 cents to $222.25, while the 2023 estimate fell 50 cents to $237.77. This put the S&P 500 estimate 2.59% and 4.59% off their respective highs. Of the firms that offered earnings guidance, 65 S&P 500 companies issued negative earnings guidance and 41 issued positive guidance. Estimated earnings for the third quarter fell by 6.8% from June 30 through September 30, which was the largest decline in the quarterly earnings estimate for a quarter since the second quarter of 2020. The number of firms reporting third-quarter results peaks the week of October 31, 2022.