According to many estimates, companies in the S&P 500 are expected to come close to or surpass a 60% growth rate in earnings per share (EPS) versus 2020’s pandemic-influenced results.
The New York Times DealBook said earlier this week,
That said, Zacks Investment Research points out that even though earnings comparisons to Q2 2020 provide relatively easy hurdles, absolute earnings are up versus the pre-pandemic results of Q2 2019.
Zacks says, regarding Figure 1, “You can see that 2021 Q2 earnings for the S&P 500 index are expected to be up +59.4% from the Covid-hit 2020 Q2 period. But even relative to the pre-Covid 2019 Q2 period, 2021 Q2 earnings are expected to be up +7.9%.”
Source: Zacks Investment Research
FactSet provided its most recent outlook for Q2 2021 earnings on July 9, with the following key highlights:
FIGURE 2: S&P 500 CHANGE IN FORWARD 12-MONTH EPS VS. CHANGE IN PRICE
FactSet also notes that there is some likelihood that the year-over-year earnings growth rate could significantly exceed its estimate of 64%:
In terms of specific sector earnings, FactSet sees the Energy, Industrials, Consumer Discretionary, Financials, and Materials sectors leading the way in terms of EPS growth (though they note that Energy is coming off a loss in Q2 2020, preventing a mathematical projection for growth).
However, the comeback in the Energy sector can be seen in projected revenue growth detailed in Figure 3. It should also be noted in Figure 3 that the Financials sector is trailing average S&P 500 revenue growth, despite EPS growth estimated to be the third-highest of all 11 sectors at 119.5%.
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