EC Looking Ahead To Q2 Earnings Season

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We are still waiting on Q1 earnings results from a couple of dozen S&P 500 members at this stage, but the reporting cycle is effectively behind us now.

In fact, of the 15 S&P 500 members on deck to report results this week, two will actually get counted towards the Q2 earnings season. These two are AutoZone (AZO - Free Report) reporting on Tuesday, May 25th, and Costco (COST - Free Report) reporting after the market’s close on Thursday, May 27th. Both of these retailers will be reporting results for their fiscal quarters ending in May, which we and other data aggregators count as part of the June-quarter reporting tally.

The other 13 S&P 500 members reporting results this week, which includes bellwethers like NVIDIA (NVDA - Free Report), Salesforce.com (CRM - Free Report), Dollar General (DG - Free Report), and other will be reporting results for their fiscal quarters ending in April, which form part of the March-quarter reporting tally.

We all know that the overall earnings picture is very strong, with broad-based growth momentum across all major sectors and the overall earnings tally reaching a new all-time quarterly record in Q1.

The year-over-year growth numbers were very strong in Q1, partly reflecting the easy comparisons to the year-earlier period. The easy comparisons issue will be even more pronounced in Q2 as the corresponding 2020 period represented the pandemic’s severest impact.

We should keep in mind, however, that the strong earnings growth we saw in Q1 and the even stronger growth expected in Q2 is also reflective of genuine growth in the absolute sense, not just a result of easy comparisons. Take a look at the chart below to get a better sense of this reality.

These are quarterly earnings totals, with aggregate earnings estimates for 2021 Q2, and actually reported earnings for 2020 Q2 and 2019 Q2 highlighted.

You can see that 2021 Q2 earnings for the S&P 500 index are expected to be up +58.4% 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 +7.3%.

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