US stock market: Q2 to Q4 2021 financial report preview
2024-07-08
■ Expected earnings per share (EPS) will increase by 10.6% compared to last year, indicating that high-profit growth expectations remain unchanged.
■ Funds are further concentrated in some stocks, and the market is concerned about whether the expected profit growth can be achieved.
Starting July 12th, financial giants will release major US companies' second to fourth-quarter financial reports. The third week (July 15-19) will see financial and electric vehicle giants' financial reports, the fourth week (July 22-26) will be high-tech and semiconductor giants, and the fifth week (July 29th to August 2nd) will be the financial reports of high-tech, semiconductor and e-commerce giants, as well as smartphone giants, including six of the seven technology giants known as the 'Glorious Seven,' which will complete their financial reports by early August. However, in the third week of August (August 12-16), there were still financial reports from retail and semiconductor giants. In the fourth week of August (August 21), there were financial reports from the remaining semiconductor giant among the 'Seven Glorious Sons.' The US stock market is likely to react to these financial reports, either positively or negatively, based on the information disclosed by management regarding the future business environment.
According to financial information firm LSEG I/B/E/S (as of June 28), the earnings-per-share (EPS) of companies in the S&P 500 index for the second quarter of 2021 are expected to increase by 10.6% compared to last year. This is a positive sign for the market, indicating a potential for stock price growth. Generally speaking, the expected EPS is often lowered from the beginning to the end of a fiscal quarter, but the second quarter of 2021 showed the opposite trend. In the pre-released guidance information, positive guidance was provided compared to the first quarter (increasing from 29 to 35). In contrast, negative guidance decreased (86 to 70), indicating that companies have eased their cautious attitude towards this quarter's financial reports. It is customary for the market to expect high-profit growth to be confirmed, thereby driving up stock prices.
The market expects that the EPS of the S&P 500 index will continue to grow until the end of 2025, with an expected growth rate of 11.2% for the following year. The expected price-to-earnings ratio (PER, based on market capitalization-weighted average) of the S&P 500 index is 21.7 times, significantly higher than the average since 2018 (18.7 times), indicating an intensification of overvaluation of stock prices. At the same time, the expected PER of the S&P 500 index based on equal weighting is 16.8 times, and the gap between the two is about five times, the most significant gap since 2015. Funds are concentrated in some stocks that benefit from the growth in demand for artificial intelligence, leading to a substantial increase in stock prices. The expected EPS growth has been integrated into stock prices, and it is necessary to carefully examine the financial reports and performance prospects of semiconductor and high-tech giants.
■ Funds are further concentrated in some stocks, and the market is concerned about whether the expected profit growth can be achieved.
Starting July 12th, financial giants will release major US companies' second to fourth-quarter financial reports. The third week (July 15-19) will see financial and electric vehicle giants' financial reports, the fourth week (July 22-26) will be high-tech and semiconductor giants, and the fifth week (July 29th to August 2nd) will be the financial reports of high-tech, semiconductor and e-commerce giants, as well as smartphone giants, including six of the seven technology giants known as the 'Glorious Seven,' which will complete their financial reports by early August. However, in the third week of August (August 12-16), there were still financial reports from retail and semiconductor giants. In the fourth week of August (August 21), there were financial reports from the remaining semiconductor giant among the 'Seven Glorious Sons.' The US stock market is likely to react to these financial reports, either positively or negatively, based on the information disclosed by management regarding the future business environment.
According to financial information firm LSEG I/B/E/S (as of June 28), the earnings-per-share (EPS) of companies in the S&P 500 index for the second quarter of 2021 are expected to increase by 10.6% compared to last year. This is a positive sign for the market, indicating a potential for stock price growth. Generally speaking, the expected EPS is often lowered from the beginning to the end of a fiscal quarter, but the second quarter of 2021 showed the opposite trend. In the pre-released guidance information, positive guidance was provided compared to the first quarter (increasing from 29 to 35). In contrast, negative guidance decreased (86 to 70), indicating that companies have eased their cautious attitude towards this quarter's financial reports. It is customary for the market to expect high-profit growth to be confirmed, thereby driving up stock prices.
The market expects that the EPS of the S&P 500 index will continue to grow until the end of 2025, with an expected growth rate of 11.2% for the following year. The expected price-to-earnings ratio (PER, based on market capitalization-weighted average) of the S&P 500 index is 21.7 times, significantly higher than the average since 2018 (18.7 times), indicating an intensification of overvaluation of stock prices. At the same time, the expected PER of the S&P 500 index based on equal weighting is 16.8 times, and the gap between the two is about five times, the most significant gap since 2015. Funds are concentrated in some stocks that benefit from the growth in demand for artificial intelligence, leading to a substantial increase in stock prices. The expected EPS growth has been integrated into stock prices, and it is necessary to carefully examine the financial reports and performance prospects of semiconductor and high-tech giants.