Not to be dramatic, but Q3 earnings are expected to be one of the last “big quarters” of growth in the aftermath of COVID. đĻ
According to Refinitiv, Q3 2021 YoY earnings growth is expected to be 29.6%. The sectors with the highest growth expectations include energy (which expects over 1,400% growth YoY), materials (expecting 92% growth YoY), and industrials (expecting 76% growth YoY.) đđđ
The remaining sectors are expecting sector-specific earnings growth of between 0.3% and 28.8%. However, the few companies which have reported so far have overwhelmingly bested analyst expectations. You can get acquainted with the specifics in the Refinitiv report for this week.
This exciting with a really big asterisk, though: this might be the peak of growth (at least for now). Refinitiv expects the fourth quarter of the year to pull down just 22.2% growth YoY. In Q1 2022, YoY earnings growth is expected to be just 6.1%. And those small single-percent figures won’t feel like much to cheer about. đŠ
Revenue growth has already been slowing down. In this quarter, it’s expected to be 14%. Next quarter, it will be 10.5%. Then we’ll be into single-digits for much of the foreseeable future.
In short: it appears that the high-powered growth in the COVID recovery is coming to a close and the economy is stabilizing. However, that stabilization might (temporarily) shake investors.Â