There’s no signal of an imminent recession within the newest earnings reporting season. With greater than 90% of the corporations having already reported their earnings for Q2, this is the scorecard.
S&P 500 working earnings per share (EPS) rose 10.9% y/y throughout the quarter to a report excessive of $60.19.
Now, right here’s extra associated glad information:
1. Quarterly earnings
Simply earlier than the beginning of the Q2 earnings reporting season, throughout the week of June 28, the analysts’ consensus forecast had implied an 9.1% enhance in Q2 EPS.
Nonetheless, firm managements should have offered numerous unfavorable steerage as a result of the Q3 EPS consensus dropped 2.7% to $61.77 over this similar interval, and the y/y progress forecast fell from 8.3% to five.8%.
2. Annual earnings
Nonetheless, the 2024 annual consensus earnings estimate remained flat throughout the newest earnings reporting season and is at present $243.51 per share.
The 2025 consensus estimate likewise remained flat; it’s at present $279.52, up 15% from the 2024 estimate. The 2026 estimate dipped throughout the August 8 week to $315.40, up 13% from the 2025 estimate.
3. No recession
Once more, there’s no recession evident in both Q2’s report earnings or in analysts’ consensus earnings estimates by way of 2026. We’ve beforehand noticed that trade analysts don’t have a superb monitor report of calling recessions.
That’s our job as economists and strategists. We appropriately pushed again in opposition to the consensus recession forecast in 2022 and 2023. We’re doing so once more this 12 months. We’d even accomplish that over the following two years.
4. Ahead earnings
In the meantime, if the no-show recession continues to not present up, S&P 500 ahead EPS ought to proceed to be a bullish main indicator for precise EPS in addition to for the economic system. Ahead earnings rose to one more record-high $265.67 throughout the August 8 week.
It’s a year-ahead main indicator of four-quarter trailing earnings, which was $232.27 by way of Q2; we calculate ahead earnings as a time-weighted common of analysts’ annual EPS consensus estimates for the present and coming 12 months.
As we’ve beforehand noticed, ahead earnings can also be extremely correlated with each the Index of Coincident Indicators (CEI) and payroll employment, which is likely one of the CEI’s 4 parts.
That is smart since worthwhile corporations are inclined to broaden their payrolls, whereas unprofitable ones have a tendency to chop their headcounts.
5. Revenues and revenue margins
Throughout Q2, S&P 500 revenues per share (RPS) rose 5.7% y/y.
That tempo is more likely to sluggish as inflation continues to average. In any occasion, RPS almost matched its report excessive throughout This autumn-2023.
The S&P 500 revenue margin rose to 12.3% throughout Q2. That’s nonetheless under its report excessive of 13.7% throughout Q2-2021.
The weekly S&P 500 ahead revenue margin rose to 13.4% throughout the August 8 week, matching its report excessive of 13.4% throughout the June 9 week of 2022.
That augurs properly for the precise revenue margin, which we count on can be rising to new report highs over the following few years in our Roaring 2020s state of affairs, which hinges on a technology-led productiveness progress increase.
