3 Companies Likely To Report Worse-Than-Expected Earnings This Week

 | Nov 07, 2022 03:36PM ET

  • S&P 500 EPS growth for Q3 is set to come in at 2.2%, unchanged from last week, and still at the lowest level since Q3 2020
  • Peak earnings season concludes this week with 33 S&P 500 companies reporting
  • Potential surprises in the week to come include: NI, DD, BDX

    • Corporate profit growth heads into the final peak week of Q3 earnings season stronger than it began. With 85% of companies reporting at this point, S&P 500 EPS growth for the quarter remains at 2.2%, unchanged from last week. This is a 0.5 percentage point decrease from where expectations stood on Sept 30, and marks the lowest growth rate in two years. (Data from FactSet)

    As with every earnings season, a majority of blue chip names are beating analysts’ expectations, but at a much lower rate for Q3. Currently 70% of companies have surpassed sell-side profit expectations, as compared to the 5-year average of 77%. The percentage by which companies are beating is also subdued at just 2.2% vs. the 10-year average of 6.5%. (Data from FactSet).

    Forward looking estimates are also being revised downward, with Q4 expectations turning negative in the last week, now anticipated to report a YoY decline of 1%. Calendar year 2023 estimates still remain inflated at 5.9%, but that number has started to fall (from 8.1% on September 30) as analysts downgrade due to the strong dollar, economic slowdown and the fall of some big tech names.

    Despite the volatile earnings season, companies continue to engage in and authorize share repurchase programs , a benefit to shareholders. It is expected that 2022 will be a record for total dollars used to buy back stocks at an estimated $1T, surpassing the previous record last year which topped $900M. This is ahead of the new 1% buyback excise tax set to begin in January 2023.

    What Will The Last Week Of Peak Earnings Season Bring?/h2

    This week we get Q3 results from 33 S&P 500 companies from a smattering of sectors. Big names to watch include LYFT (NASDAQ:LYFT) after their recent announcement of a significant workforce reduction, TripAdvisor (NASDAQ:TRIP) for a further read on the travel industry and Walt Disney Company (NYSE:DIS) for an update on the streaming wars. We also start to get results from some apparel and accessories names such as Tapestry (NYSE:TPR), Ralph Lauren (NYSE:RL), and Warby Parker (NYSE:WRBY).