Regular readers of our earnings commentary know that we started seeing a positive shift in the overall earnings picture in July last year. This improving trend in estimate revisions remained in place over the following months and actually accelerated over the last few months, as the chart below highlighting the evolution of 2021 Q1 earnings growth estimates shows.

As the chart above shows, the expectation is for total S&P 500 earnings to increase +18.5% in Q1 from the same period last year on +5.3% higher revenues. Today’s +19.4% earnings growth rate is up from +18.5% last week.

Part of the strong growth in Q1 is reflective of easy comparisons, as the last month of 2020 Q1 was weighed down by the pandemic, though the full impact showed up in Q2. Those easy comparisons are notable for the Finance, Consumer Discretionary, Transportation, and Energy sectors.

The Q1 earnings season will really get going when the big banks come out with results on March 14^th. The wide majority of companies have fiscal quarters that correspond with the calendar quarters, which is March 31^st for Q1.

But there are almost two dozen S&P 500 members that have fiscal quarters that ended in February and 8 such companies, including FedEx (FDX - Free Report), Nike (NKE - Free Report), Costco (COST - Free Report), and others have reported their fiscal February-ending quarterly results. We and other data aggregators club the results from these 8 index members as part of the 2021 Q1 tally.

We have another 4 S&P 500 members on deck to report fiscal February-quarter results this week, including Adobe (ADBE - Free Report) and General Mills (GIS - Free Report). Also reporting February-quarter results this week, but not part of the S&P 500 index, is GameStop (GME - Free Report), which has been in the news lately for reasons other than its core business

Looked at this way, we will have counted almost two dozen such Q4 results before JPMorgan (JPM - Free Report) reports its quarterly results on April 14^th.

The table below shows summary expectations for 2021 Q1, contrasted with what was actually achieved in 2020 Q4.

The chart below takes a big-picture view of the quarters, showing Q1 earnings and revenue growth highlighted and shown in the context of what was actually achieved in the last few quarters and what is expected in the coming periods.

The chart below shows quarterly earnings totals or quarterly aggregate net income, instead of year-over-year growth rates. This gives us a better appreciation of the pandemic’s earnings impact.

The chart below presents the big-picture view on an annual basis. As you can see below, 2021 earnings and revenues are expected to be up +24.4% and +8.6%, respectively, which follows the Covid-driven decline of -13.2% in 2020.

On an index ‘EPS’ basis, the 2021 expectation works out to $169.08, up from $135.93 per ‘Index share’ in 2020.

These full-year estimates have been going up as well, as the chart below shows.

We envision these favorable revisions trend to accelerate over the next few months as the vaccination effort reaches a critical mass and greater ‘normalcy’ returns to life.