For Immediate Release
Chicago, IL-March 24, 2022-Zacks Director of Research Sheraz Mian said, “The trend of revisions has been negative recently, although positive changes in estimates in the Energy sector have been largely offset the estimates elsewhere. “
The Q1 Earnings Season is starting
Note: The following is an excerpt from this week Revenue Trends report. You can access the full report which contains detailed historical actual and estimates for the current and following periods, please click here >>>
Here are the key points:
· S&P 500 total earnings for the first quarter of 2022 are expected to increase +3.6% from the same period last year to +10.1% higher earnings. This will follow +32.4% growth in revenues to +15.8% growth in revenues in 2021 Q4.
· The trend of changes has recently been negative, although positive changes in Energy sector estimates have largely offset estimation reductions elsewhere. Since the beginning of the year, estimates for 2022 Q1 have dropped for 9 of Zacks ’16 sectors, even though they are up +0.1% on the aggregate index.
· Excluding positive changes in Energy sector estimates, revenue estimates in 2022 Q1 will be down -1.1% for 2022 Q1, where Transportation, Consumer Discretionary, Aerospace, Retail, and Consumer Staples are experiencing a significant reduction in estimation.
· Results began to come in early 2022 Q1, with results from 11 members of the S&P 500 already coming out. Total revenues for these 11 companies rose +9.4% from the same period last year to +14.2% higher revenues, with 72.7% more than EPS estimates and 90.9%. exceed revenue estimates.
The overall picture of earnings has been very strong recently, with growth rates and the total value of the dollar at very high levels. The growth rate will decrease significantly in the coming seasons.
If we look at the trend of changes in the aggregate, the estimates are still rising, albeit only moderately. There are many cross currents once we look at the trend of changes at the granular level, with rising estimates in some sectors reducing estimates in others.
In fact, estimates have dropped for 9 of Zacks ’16 sectors since the beginning of the year, with the largest declines in the Consumer Discretionary, Utilities, Transportation, and Conglomerates sectors. Offsetting the negative revisions to this estimate throughout the year 2022 estimates, are rising estimates for the Energy, Construction and Vehicles sectors.
Hilton Worldwide HLT and Las Vegas Sands LVS are examples of Consumer Discretionary operators that have experienced estimate reductions recently. Examples from other sectors on the side of negative changes include Southwest LUV in the Transportation sector and General Electric GE in the Conglomerates sector.
Estimates of the energy sector are rising as a result of rising oil prices, even before the situation in Ukraine and we can see it in all the major players in the sector. Estimates in the Construction and Auto sector have also been rising recently.
There is a rising level of uncertainty about the outlook, driven by the lack of visibility of the macroeconomy. The situation in Ukraine appears to be exacerbating existing supply-chain issues, combined with its impact on oil prices, weighing on the inflation situation in unpredictable ways. The emerging trend of revenue changes will reflect this macro backdrop.
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