{"id":14662,"date":"2023-10-06T15:18:45","date_gmt":"2023-10-06T21:18:45","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=14662"},"modified":"2023-10-06T15:18:45","modified_gmt":"2023-10-06T21:18:45","slug":"sp-500-earnings-will-strong-upside-surprises-continue-w-q3-23-eps","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=14662","title":{"rendered":"SP 500 Earnings: Will Strong Upside Surprises Continue w\/ Q3 &#8217;23 EPS ?"},"content":{"rendered":"<ul>\n<li>For Q1 &#8217;23 earnings, the &#8220;upside surprise&#8221; or beat rate for Q1 &#8217;23 SP 500 EPs was 6.8%%;<\/li>\n<li>For Q2 &#8217;23 earnings, the &#8220;upside surprise&#8221; or beat rate for Q2 &#8217;23 SP 500 EPS was even stronger at +7.9;<\/li>\n<li>Year-over-year EPS growth for Q1 and Q2 &#8217;23 was just 1% and -2% respectively.<\/li>\n<\/ul>\n<p>The revenue upside surprises were much smaller for both Q1 and Q2 &#8217;23 at +1.3% and +2.6% respectively.<\/p>\n<p>The point being &#8211; despite lackluster SP 500 EPS and revenue growth &#8211; the upside surprise (meaning actual EPS vs consensus expectations) in SP 500 earnings has been &#8220;way good&#8221;.<\/p>\n<p>Does it continue for Q3 &#8217;23 ? We&#8217;ll find out starting Friday, October 13th, 2023, when a number of large-cap financials report.<\/p>\n<p><em><strong>No recession in sight for SP 500 earnings:\u00a0<\/strong><\/em><\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/10\/Sp500qtrlyepsrevgrorates10623.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-14664\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/10\/Sp500qtrlyepsrevgrorates10623-300x162.png\" alt=\"\" width=\"300\" height=\"162\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/10\/Sp500qtrlyepsrevgrorates10623-300x162.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/10\/Sp500qtrlyepsrevgrorates10623-1024x554.png 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/10\/Sp500qtrlyepsrevgrorates10623-150x81.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/10\/Sp500qtrlyepsrevgrorates10623-768x415.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/10\/Sp500qtrlyepsrevgrorates10623.png 1361w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>Here&#8217;s one of my favorite tables: note the stability in 2024 EPS estimates for all 4 quarters.<\/p>\n<p>That&#8217;s a good tell.<\/p>\n<p>While everyone is locked in on Q3 and Q4 24, so far there has been very little negative revision in the 2024 EPS growth rates.<\/p>\n<p>As was noted in <a href=\"https:\/\/fundamentalis.com\/?p=14652\">last night&#8217;s post<\/a> too, year-over-year comparisons for SP 500 EPS and revenue growth get much easier starting in Q4 &#8217;23.<\/p>\n<p>Watch for major earnings pre-announcements that are negative; when companies start warning that&#8217;s the signal that the environment has changed, but that usually shows up in numbers (to a smaller degree) in revisions beforehand if the analysts are doing their checks.<\/p>\n<p>There will be more forthcoming over the weekend in terms of SP 500 earnings and economic commentary.<\/p>\n<p><em><strong>SP 500 data:<\/strong><\/em><\/p>\n<ul>\n<li>The forward 4-quarter estimate (FFQE) jumped to $239.93 this week, up from last week&#8217;s $232.95 as the new FFQE runs from Q4 &#8217;23 through Q3 &#8217;24, and thus, the old Q3 &#8217;23 through Q2 &#8217;24 is gone.<\/li>\n<li>Given Friday&#8217;s market action, the new PE is 18x even with the rally and given the jump in the FFQE, down from 18.5x last week;<\/li>\n<li>Even the SP 500 earnings yield ended the week higher at 5.56% vs last week&#8217;s 5.43%;<\/li>\n<li>The Q3 &#8217;23 bottom-up quarterly estimate is $55.78 down from $55.92 as of last Friday, September 29th;<\/li>\n<li>It will take a few weeks to get a good read on the &#8220;upside surprises&#8221; for revenue and EPS;<\/li>\n<\/ul>\n<p><em><strong>Summary \/ conclusion: <\/strong><\/em>So far, Q3 &#8217;23 SP 500 earnings should be ok, given the strength in upward revisions and the beat rates from Q2 &#8217;23 earnings. But we&#8217;ll have to wait and see what the numbers and guidance look like.<\/p>\n<p>Given the economic data like this morning&#8217;s September jobs report it&#8217;s hard not to be bullish SP 500 earnings results for Q3 &#8217;23, but that makes me uncomfortable. The best results come from low expectations and poor sentiment as we enter earnings season.<\/p>\n<p>All SP 500 EPS and revenue data are sourced from IBES data by Refinitiv. Take everything with a grain of salt. Past performance is no guarantee of future results.<\/p>\n<p>Thanks for reading. Much more to come over the weekend.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>For Q1 &#8217;23 earnings, the &#8220;upside surprise&#8221; or beat rate for Q1 &#8217;23 SP 500 EPs was 6.8%%; For Q2&hellip;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[182,91],"tags":[],"class_list":["post-14662","post","type-post","status-publish","format-standard","hentry","category-sp-500s-upside-surprise","category-weekly-earnings-update"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/14662","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14662"}],"version-history":[{"count":5,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/14662\/revisions"}],"predecessor-version":[{"id":14668,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/14662\/revisions\/14668"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14662"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14662"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14662"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}