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Canada Earnings Season Review: Q4 2022

Earnings

By John Butters  |  March 15, 2023

At this late stage of the Q4 earnings season for the S&P/TSX Composite, the number of companies reporting a positive earnings surprise is below average, while the magnitude of earnings surprises is better than average. On a year-over-year basis, the S&P/TSX Composite is reporting a (year-over-year) decline in earnings for the first time in more than two years.

Overall, 90% of the companies in the S&P 500 have reported actual results for Q4 2022 to date. Of these companies, 52% have reported actual EPS above estimates, which is below the five-year average of 54%. In aggregate, companies are reporting earnings that are 1.2% below estimates, which is above the five-year average of -2.0%.

The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings decline for the fourth quarter is -0.8% today, compared to an earnings growth rate of 3.5% at the end of the fourth quarter (December 31).

If -0.8% is the actual decline for the quarter, it will mark the first year-over-year earnings decline reported by the S&P/TSX Composite since Q3 2020 (-23.5%).

Five of the 11 sectors are reporting (or have reported) year-over-year earnings growth, led by the Industrials, Utilities, and Energy sectors. On the other hand, six sectors are reporting (or have reported) a year-over-year decline in earnings, led by the Health Care and Materials sectors.

Looking ahead, analysts expect earnings declines for the first three quarters of 2023. For Q1 2023, Q2 2023, and Q3 2023 analysts are projecting earnings declines of -11.1%, -7.8%, and -0.6%, respectively. For CY 2023, analysts are predicting a decline in earnings of -3.5%.

The forward 12-month P/E ratio is 12.7, which is below the five-year average (14.9) and below the ten-year average (15.2).

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This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.

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John Butters

Vice President, Senior Earnings Analyst

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His weekly research report, “Earnings Insight,” provides analysis and commentary on trends in corporate earnings data for the S&P 500 including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).

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The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.