S&P 500 Weekly Earnings Update: Year-Over-Year Growth Rates Will Start To Slow

On Tuesday, July 13, pre-market, we get JPMorgan (NYSE:JPM), and Goldman Sachs (NYSE:GS) and then Wednesday we see Bank of America‘s (NYSE:BAC) second quarter’s results as well as Wells Fargo (NYSE:WFC).

At least 18 major financial services firms report this week. Here is another look at scheduled earnings releases over the next 2 weeks, from Bespoke:

The source data is IBES by Refinitiv, but the trends tracked weekly by us, shows that y/y growth rates will slow as compares get tougher against 2020’s recovery.

That’s probably not a big surprise to readers.

Look at the y/y growth in percentages for Q2 ’21 EPS and revenue. The second quarter’s ’21 EPS expected growth rate as of this weekend rose 20% since Dec. 31, 2020. Expected revenue growth rose from 12% to 18% for Q2 ’21.

The “average” y/y revenue growth rate for the S&P 500 going back to Q4 ’12 (when I first started tracking the data) was +2.5%. Average EPS growth was +4.9%.

Look at the above and below spreadsheets against that historical average.

2022’s expected quarterly growth rates for the S&P 500 will return to a more normal, historical pattern.

S&P 500 data: 

Top 10 client positions as of June 30, 2021:

S&P 500 YTD return as of June 30, 2021: +15.25%

Top 10 equity positions as of June 30, 2021:

While everyone wants to talk individual stocks and individual stock earnings expectations, tracking the S&P 500 data as a whole—and the patterns in evidence—still indicates the higher revisions to expected quarterly growth rates hasn’t changed for the key benchmark for the last 6 months.

The big reports this week will come from financials. Expected revenue growth for the sector is -5.3% for the second quarter, while EPS growth is expected at +102%. Third quarter, 2021 Financial sector revenue growth is -2.7% while EPS next quarter is looking at +15.2% as of last week.

We’ll know more after the financials report this week. With loan loss reserve releases, there still should be capital to return to bank and financial sector investors.

Take everything you read with a healthy dose of skepticism. Invest your money based on your financial profile and your own appetite for volatility and risk.

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