MCCAIG US markets have been rising in anticipation of Q2 earnings season, which unofficially kicks off Friday with results from the big banks. The good news is that earnings are expected to continue to be a bright spot through the second half of the year. What’s especially bullish as we enter the Q2 earnings season is the fact that Wall Street expectations have barely budged since the end of Q1.
According to FactSet, S&P 500 EPS growth is anticipated to hit 8.8% for the second quarter. This is down just ever so slightly from the 9.
0% expectation on March 31. 1 This is pretty atypical as far as estimate revisions go. In response to more conservative corporate guidance, analysts tend to pull their estimates down by 3-4% in the weeks ahead of an earnings season.
The fact that analysts mostly kept their estimates as is suggests that corporations believe they can surpass these expectations. If growth comes in at 8.8%, it would be the highest growth rate in over two years, that’s with eight of the eleven sectors anticipated to show YoY increases.
On the flipside, however, while earnings growth is expected to be a highlight of the Q2 season, revenue estimates still remains a little light. Large corporations continue to cost cut their way to profit growth, which is a fine short-term solution, but soon investors will want to see a return to robust revenue growth driving earnings. Q2 revenue growth is expected to come in at 4.
6%. 2 Analysts have also barely touched that estimate, d.
