S&P 500 earnings, revenue update: Q4 ’21, plus 2022 growth rate revisions

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Here’s the chart on how Q4 21 ‘expected’ revenue has changed by industry over the past 90 days:

S&P 500 T4 income revisions

The S&P 500’s expected revenue growth for the fourth quarter of 21 has fallen from 10.6% to 12% in the past 90 days.

The 3 sectors with downward revisions are Communications Services, Industrials and Technology, which account for around 49% of the S&P 500 market capitalization.

The sectors with the strongest upward revisions over the past 90 days are basic materials, energy and real estate, of which 3 sectors account for 8% of the S&P 500.

Here’s a quick quiz for readers: Since Q4 2011, what is the “average” quarterly EPS growth rate for the S&P 500, through Q3 ’21 (or 40 quarters)?

Response: 11.1%

What is the “average” quarterly growth rate of S&P 500 revenue since Q4 2012?

Answer: 4.5%

Here are the EPS and revenue growth rates estimated for 2022 for the S&P 500 by quarter:

S&P 500 2022 Estimated EPS and Revenue Growth Rates
S&P 500 2022 Estimated EPS and Revenue Growth Rates

The expected average EPS growth rate of the S&P 500 as it stands today for the 4 quarters of 2022 is 8.6%, while the expected average revenue growth rate is 7.3%.

We are back to average years, but in reality it can be anything but ordinary.

(All data is from IBES by Refinitiv)

Key data from the S&P 500:

  • The 4-quarter forward estimate this week is $ 216.14 versus $ 216.08 last week. Next week, with the quarterly rollover from Q4 ’21 to Q3 ’22 to Q1 ’22 – Q4 ’22, the forecast estimate will drop to the $ 222 area or what is otherwise the current 2003 schedule estimate.
  • The PE ratio to this week’s forward estimate is 22x, or to next week’s expected estimate it is 21.4x.
  • The return on earnings for the S&P 500 using 4,780 since the market is not yet closed is 4.52%, up from 4.57% last week.
  • The final third-quarter ascending quarterly EPS estimate of 21 was 453.71 compared to the starting 10.1 estimate of $ 49.11 for a 9% “upside surprise” factor. These upside surprises will continue to subside in Q4 ’21 and Q1 ’22 as the S&P 500 “will face the strongest quarters of rebound from the initial close to the end of 20.
  • The first quarter of 21 will be a very difficult comparison for the S&P 500 as overall EPS growth was 52.8% and S&P 500 revenue growth was 13%.
  • The publication of Q4 ’21 results begins in two weeks.

Summary / conclusion: Thanks for reading this year. I would expect the growth of the S&P 500 EPS in 2022 to be at least 10% to 12% and more in line with long-term averages after the third quarter turn of 22, which exceeds the ridiculous numbers in the second. quarter of 21. The outlook for Q4 ’21 earnings starting in two weeks is likely to be cautious given more uncertainty.

Revisions to revenues in commodity sectors such as energy and basic materials remain very strong.

Walgreens (NASDAQ 🙂 reports next week. WBA is a consumer staple and I’m a staunch fan of the retailer, but the stock certainly has some headwinds.

It has been a long year. Thank you for being a loyal reader.

Enjoy all the talk about S&P 500 earnings.

Take everything you read here with healthy skepticism, and not just here but on every site.

Thanks for reading. Good year !

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