U.S. Stock Market: First Quarter Earnings Preview
2024-04-10
■ Earnings per share (EPS) are expected to increase by 5.0% over last year, and downward revisions are already underway
■ Pay attention to whether it is in line with market expectations for earnings growth.
Starting on the 12th, the first-quarter earnings releases of major U.S. financial giants’ companies will be launched. In the third week (15th-19th) there will be various financial industries, in the fourth week (22-26th) there will be high-tech giants, semiconductor companies, electric vehicles, and e-commerce giants, and in the fifth week (29th-5th) On March 3), semiconductor companies, smartphone giants and other high-profile companies will release financial reports. Six of the seven major high-tech companies known as the "Brilliant Seven" will release financial reports before the beginning of May. After that, in the second week of May (13-17) there will be the financial report release of retail giants and semiconductor companies, and in the second week of May (22nd) there will be the release of the financial report of the remaining semiconductor company among the "Glorious Seven". In the foreseeable future, the U.S. stock market will experience mixed emotions depending on the financial reports of individual companies and management's disclosure of information about the future business environment.
According to statistics from financial information company LSEG I/B/E/S (as of the 5th), first-quarter earnings per share (EPS) of S&P 500 companies are expected to increase by 5.0% from last year, which means that since There has been a downward revision since early January (+7.2%). Typically, expected EPS will trend downward from the beginning of the quarter to the end of the quarter, and that's exactly what's happening now. According to the companies' EPS pre-announcements (guidance), 29 companies are actively guiding, while 86 are negatively guiding, which shows that companies are cautious about this quarter's financial reports. It has become a common practice that people will pay close attention to whether the actual performance of EPS can exceed market expectations, thus driving up the stock price.
The market expects the S&P 500's EPS to accelerate expansion in the second half of this year, with growth expected to be 11.2% in the coming year. The forward price-to-earnings ratio (PER) of the S&P 500 Index is 21.1 times, which is much higher than the average level since 2018 (18.6 times). The stock price has become overpriced. However, the PEG ratio (expected PER/expected EPS growth rate for the next year) of the same index is 1.88 times, which is a significant decrease from February 2023 (5.79 times). As the expected growth in demand for artificial intelligence incorporates EPS growth expectations into the stock price, it is confirmed in the earnings release, thus rationalizing the stock price to maintain an upward trend at high levels. Therefore, it is important to note that if the earnings announcement fails to meet market expectations for profit growth, it may trigger a rapid adjustment in stock prices.
■ Pay attention to whether it is in line with market expectations for earnings growth.
Starting on the 12th, the first-quarter earnings releases of major U.S. financial giants’ companies will be launched. In the third week (15th-19th) there will be various financial industries, in the fourth week (22-26th) there will be high-tech giants, semiconductor companies, electric vehicles, and e-commerce giants, and in the fifth week (29th-5th) On March 3), semiconductor companies, smartphone giants and other high-profile companies will release financial reports. Six of the seven major high-tech companies known as the "Brilliant Seven" will release financial reports before the beginning of May. After that, in the second week of May (13-17) there will be the financial report release of retail giants and semiconductor companies, and in the second week of May (22nd) there will be the release of the financial report of the remaining semiconductor company among the "Glorious Seven". In the foreseeable future, the U.S. stock market will experience mixed emotions depending on the financial reports of individual companies and management's disclosure of information about the future business environment.
According to statistics from financial information company LSEG I/B/E/S (as of the 5th), first-quarter earnings per share (EPS) of S&P 500 companies are expected to increase by 5.0% from last year, which means that since There has been a downward revision since early January (+7.2%). Typically, expected EPS will trend downward from the beginning of the quarter to the end of the quarter, and that's exactly what's happening now. According to the companies' EPS pre-announcements (guidance), 29 companies are actively guiding, while 86 are negatively guiding, which shows that companies are cautious about this quarter's financial reports. It has become a common practice that people will pay close attention to whether the actual performance of EPS can exceed market expectations, thus driving up the stock price.
The market expects the S&P 500's EPS to accelerate expansion in the second half of this year, with growth expected to be 11.2% in the coming year. The forward price-to-earnings ratio (PER) of the S&P 500 Index is 21.1 times, which is much higher than the average level since 2018 (18.6 times). The stock price has become overpriced. However, the PEG ratio (expected PER/expected EPS growth rate for the next year) of the same index is 1.88 times, which is a significant decrease from February 2023 (5.79 times). As the expected growth in demand for artificial intelligence incorporates EPS growth expectations into the stock price, it is confirmed in the earnings release, thus rationalizing the stock price to maintain an upward trend at high levels. Therefore, it is important to note that if the earnings announcement fails to meet market expectations for profit growth, it may trigger a rapid adjustment in stock prices.