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Pictures VS. Thousands of Words and Numbers

by Gregory M. Drahuschak October 11, 2022
In coming weeks, companies will reveal their third-quarter results. It is up to investors to be sure they properly interpret the results.

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.

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This report is provided for informational and educational purposes only and shall in no event be construed as an offer to sell or a solicitation of an offer to buy any securities or a recommendation for any strategy or to buy, sell, or hold any product. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. Employees of Janney Montgomery Scott LLC or its affiliates may, at times, release written or oral commentary, technical analysis, or trading strategies that differ from the opinions expressed here. The information described herein is taken from sources which we believe to be reliable, but the accuracy and completeness of such information is not guaranteed by us. The opinions expressed herein may be given only such weight as opinions warrant. This Firm, its officers, directors, employees, or members of their families may have positions in the securities mentioned and may make purchases or sales of such securities from time to time in the open market or otherwise and may sell to or buy from customers such securities on a principal basis. This report is the intellectual property of Janney Montgomery Scott LLC (Janney) and may not be reproduced, distributed, or published by any person for any purpose without Janney’s prior written consent. This presentation has been prepared by Janney Investment Strategy Group (ISG) and is to be used for informational purposes only. In no event should it be construed as a solicitation or offer to purchase or sell a security. Past performance is no guarantee of future performance and future returns are not guaranteed. There are risks associated with investing in stocks such as a loss of original capital or a decrease in the value of your investment. For additional information or questions, please consult with your Financial Advisor

About the author

Gregory M. Drahuschak

Equity Market Analyst, ISG

Read more from Gregory M. Drahuschak

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Pictures VS. Thousands of Words and Numbers

by Gregory M. Drahuschak October 11, 2022
In coming weeks, companies will reveal their third-quarter results. It is up to investors to be sure they properly interpret the results.

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.

Continue to read full PDF

This report is provided for informational and educational purposes only and shall in no event be construed as an offer to sell or a solicitation of an offer to buy any securities or a recommendation for any strategy or to buy, sell, or hold any product. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. Employees of Janney Montgomery Scott LLC or its affiliates may, at times, release written or oral commentary, technical analysis, or trading strategies that differ from the opinions expressed here. The information described herein is taken from sources which we believe to be reliable, but the accuracy and completeness of such information is not guaranteed by us. The opinions expressed herein may be given only such weight as opinions warrant. This Firm, its officers, directors, employees, or members of their families may have positions in the securities mentioned and may make purchases or sales of such securities from time to time in the open market or otherwise and may sell to or buy from customers such securities on a principal basis. This report is the intellectual property of Janney Montgomery Scott LLC (Janney) and may not be reproduced, distributed, or published by any person for any purpose without Janney’s prior written consent. This presentation has been prepared by Janney Investment Strategy Group (ISG) and is to be used for informational purposes only. In no event should it be construed as a solicitation or offer to purchase or sell a security. Past performance is no guarantee of future performance and future returns are not guaranteed. There are risks associated with investing in stocks such as a loss of original capital or a decrease in the value of your investment. For additional information or questions, please consult with your Financial Advisor

About the author

Gregory M. Drahuschak

Equity Market Analyst, ISG

Read more from Gregory M. Drahuschak

Related Articles

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