S&P 500 Earnings Season Update: April 28, 2023

At the mid-point of the Q1 2023 earnings season, S&P 500 companies are recording their best performance relative to analyst expectations since Q4 2021. Both the number of companies reporting positive EPS surprises and the magnitude of these earnings surprises are above their 10-year averages. The index is reporting higher earnings for the first quarter today relative to the end of last week and relative to the end of the quarter. However, the index is still reporting a year-over-year decline in earnings for the second straight quarter.

Overall, 53% of the companies in the S&P 500 have reported actual results for Q1 2023 to date. Of these companies, 79% have reported actual EPS above estimates, which is above the 5-year average of 77% and above the 10-year average of 73%. In aggregate, companies are reporting earnings that are 6.9% above estimates, which is below the 5-year average of 8.4% but above the 10-year average of 6.4%.

As a result, the index is reporting higher earnings for the first quarter today relative to the end of last week and relative to the end of the quarter. The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings decline for the first quarter is -3.7% today, compared to an earnings decline of -6.3% last week and an earnings decline of -6.7% at the end of the first quarter (March 31).

Positive earnings surprises reported by companies in the multiple sectors (led by the Information Technology, Consumer Discretionary, Energy, Industrials, and Communication Services sectors) were the largest contributors to the decrease in the overall earnings decline for the index over the past week. Positive earnings surprises reported by companies in multiple sectors (led by the Consumer Discretionary, Information Technology, Financials, Communication Services, and Industrials sectors) have been the largest contributors to the decrease in the overall earnings decline for the index since March 31.

If -3.7% is the actual decline for the quarter, it will mark the second straight quarter in which the index has reported a decrease in earnings.

Five of the eleven sectors are reporting year-over-year earnings growth, led by the Consumer Discretionary and Industrials sectors. On the other hand, six sectors are reporting a year-over-year decline in earnings, led by the Materials and Health Care sectors.

In terms of revenues, 74% of S&P 500 companies have reported actual revenues above estimates, which is above the 5-year average of 69% and above the 10-year average of 63%. In aggregate, companies are reporting revenues that are 2.1% above the estimates, which is above the 5-year average of 2.0% and above the 10-year average of 1.3%.

The index is also reporting higher revenues for the first quarter today relative to the end of last week and relative to the end of the quarter. The blended revenue growth rate for the first quarter is 2.9% today, compared to a revenue growth rate of 2.1% last week and a revenue growth rate of 1.9% at the end of the first quarter (March 31).

Positive revenue surprises reported by companies in the multiple sectors (led by the Consumer Discretionary, Industrials, Energy, and Health Care sectors) were the largest contributors to the increase in the overall revenue growth rate for the index over the past week. Positive revenue surprises reported by companies in multiple sectors (led by the Health Care, Financials, and Consumer Discretionary sectors) have been the largest contributors to the increase in the overall revenue growth rate for the index since March 31.

If 2.9% is the actual growth rate for the quarter, it will mark the lowest revenue growth rate reported by the index since Q3 2020 (-1.1%).

Eight sectors are reporting year-over-year growth in revenues, led by the Financials and Consumer Discretionary sectors. On the other hand, three sectors are reporting a year-over-year decline in revenues, led by the Materials sector.

Looking ahead, analysts still expect earnings growth for the second half of 2023. For Q2 2023, analysts are projecting an earnings decline of -5.0%. For Q3 2023 and Q4 2023, analysts are projecting earnings growth of 1.7% and 8.8%, respectively. For all of CY 2023, analysts predict earnings growth of 1.2%.

The forward 12-month P/E ratio is 18.1, which is below the 5-year average (18.5) but above the 10-year average (17.3). It is also equal to the forward P/E ratio of 18.1 recorded at the end of the first quarter (March 31).

During the upcoming week, 162 S&P 500 companies (including one Dow 30 component) are scheduled to report results for the first quarter.

Q1 2023: Scorecard

Q1 2023: Growth

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