Handicapping the Q4 Earnings Season

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>>>

The 2021 Q4 reporting cycle will really get going with the January 14th quarterly reports from JPMorgan JPM, Wells Fargo WFC and others. But the earnings season has actually gotten underway already, with results from 16 S&P 500 members out at this stage.

These 16 index members include operators such as FedEx FDX, Adobe ADBE and others that have fiscal quarters ending in November, which we count as part of our Q4 tally. By the time the big banks put a spotlight on the Q4 earnings season, we will have seen such early results from almost two dozen index members.

It is too early to draw any firm conclusions from the 16 index members that have reported already, but we are off to a good start. Total earnings for these 16 index members are up +32.5% from the same period last year on +18.8% higher revenues, with 87.5% beating EPS and revenue estimates. This is better than what we saw from this same group of 16 companies in the preceding reporting cycle.

Looking at Q4 as a whole, total earnings for the quarter are expected to be up +19.8% from the same period last year on +11.6% higher revenues.

The growth pace decelerates significantly in the following periods, as you can see in the chart below that provides a big-picture view of earnings on a quarterly basis.

Image Source: Zacks Investment Research

The chart below shows the overall earnings picture on an annual basis, with the growth momentum expected to continue.

Image Source: Zacks Investment Research

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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