A Quick Look At 2022 And What Consensus Estimates Were One Year Ago
Brian Gilmartin | Sep 19, 2021 12:23AM ET
On Sept. 18, 2020, the consensus year-over-year EPS growth estimate for Q2 ’21 was 43.5%. The actual growth rate with just two weeks left in the quarter is—as of Friday—95.5%.
The expected yoy revenue growth rate for Q2 ’21 on Sept. 18, 2020 was 12.6%, but that same number today is 25%, with two weeks left in Q2 ’21. (For all practical purposes, assume that Q2 ’21 won’t change since companies reporting in September typically have August ’21 quarter-end.)
Looking at the inflection point, when Q4 ’20 earnings started in January ’21, the Q2 ’21 growth rates started to accelerate. and the numbers accelerated even faster starting on Feb. 1 ’21.
The reason for pointing this out is that sell-side consensus became even more tentative around the pandemic and they dramatically underestimated the actual strength of the S&P 500 results the last 4 – 5 quarters.
It will be interesting to see how 2022 S&P 500 EPS and revenue growth rate revisions change with Q3 ’21 earnings starting early October ’21.
How does 2022 estimated quarterly growth rates look today ?
This data from IBES by Refinitiv from the “Earnings Scorecard” shows the progression in expected 2022 S&P 500 EPS and revenue growth rates by quarter since late April ’21.
Next year will likely see more “normal” EPS and revenue growth rates, but as readers can see, the estimated growth rates are still trending higher.
That’s a good sign.
It doesn’t mean readers should be bullish or bearish: in 1994, S&P 500 EPS grew 20% yoy and the S&P 500 returned 1% on the year thanks to 6 fed funds rate hikes by the Fed and higher interest rates, across the yield curve.
But given the old saying, “the fastest man doesn’t always win the race, but it’s not a bad way to bet,” the positive revisions are comforting to see for the bulls.
Capital markets and conditions change rapidly these days. Read everything with great skepticism.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.