Q3 was a beefy quarter for earnings. 💪 Earnings grew 42.6% YoY and revenue grew 17.0% YoY among S&P companies, with the energy sector taking the lead. Almost every sector did better than expected, helping the index best analyst estimates overall. Though Q3 is a distant memory, we need to put our earnings cap on for the real all-star of 2021: Q4 earnings!! There’s no better time for them to come, especially with all the FUD in the equities market. 🥳
This week marks the formal start to Q4 earnings (yes, 20 companies in the S&P 500 have already reported.) Many of those names will be big bank stocks, reporting on Friday. Financials is expected to greatly benefit from rising interest rates and new macro policy. Banks have been retreating from old-fashioned sources of income, like high fees, because of competition with fintech and neobanks. However, banks will likely benefit in the form of higher interest income. 💰
Ultimately, banks will be a huge indicator of what’s to come. The narrative for Q4 earnings will be companies facing threats of slowed earnings and revenue growth; the pandemic pressed “reset” on business operations, which made for fantastic YoY earnings and revenue growth. In 2022, those exciting double-digit growth figures might start to look a lot less appetizing to investors. 🤢 Refinitiv estimates earnings growth of 22.4% YoY and revenue growth of 12.1% for the quarter. Both figures could increase, as they did in Q3, thanks to energy names.
Overall, Q4 will be an indicator for FY 2022. So far, Refinitiv is forecasting a 7.6% growth rate in the first quarter of 2022. However, much of that growth is coming from energy companies, and a lot of that growth may already be priced in.
You can keep track of Q4 earnings as they happen on Refinitiv Lipper’s “This Week in Earnings,”updated every Friday. We’ll touch on earnings throughout the quarter. Keep your eyes peeled. 🕵️♀️