In the background, the Q1 earnings season is winding down, with more than 90% of the S&P 500 now reporting. The following are some metrics from the reporting period, and where it has left valuations against a backdrop of falling stock prices.
Seventy-seven per cent of the S&P 500 topped earnings expectations, according to Bloomberg’s tally, which is roughly in line with longer-term norms. Meantime, 67% topped the mark on revenues, which is a solid performance.
Overall earnings growth looks to come in at around 10% y/y, or around 4% excluding energy. Coming into the start of the earnings season in early April, consensus expectations were for 6.5% growth, so the bar has been topped.
That said, the magnitude of earnings strength and surprises is indeed fading. Growth has clearly slowed from a run rate averaging around 50% y/y through 2021 (seasonally adjusted, they might be down quarter-over-quarter as well). And, the average amount by which companies topped expectations came in at 5% in the quarter, which continues the shrinking trend of recent quarters.
|Table 1 - Market Performance|
|Source: BMO Economics, Bloomberg|