Ahead of Q1 2022 earnings season

Note: The following is an excerpt from this week’s article. Earnings Trends report. You can access the full report which contains actual histories and detailed estimates for the current and next periods, please click here>>>

Here are some of the key points:

  • Earnings growth is expected to slow in the current and future period due to tough comparisons.
  • The trend in revisions has been negative lately, with estimates for the current period declining slightly. This follows the trend of consistently positive revisions over the previous six quarters.
  • S&P 500 total earnings for the first quarter of 2022 are expected to be up +3.7% from the same period last year on revenues up +9.5%. This would follow +32.2% earnings growth on +15.8% revenue growth in Q4 2021.
  • Estimates for the full year 2022 have stabilized in recent weeks, after starting to weaken towards the end of the fourth quarter of 2021. Current estimates for 2022 results are up +2.6% since the beginning of October 2021 , but up only +0.7% excluding Energy.

The overall earnings picture has been very strong lately, with growth rates as well as absolute dollar totals at very high levels. The pace of growth slows significantly in subsequent periods, as you can see in the chart below which gives an overview of earnings on a quarterly basis.

Image source: Zacks Investment Research

The chart below presents the overall earnings picture on a yearly basis, with the growth momentum expected to continue.

Zacks Investment Research
Image source: Zacks Investment Research

We remain positive in our earnings outlook as we view the recent negative change in the revisions trend as transitory factors related to Omicron.

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