The Weekly Update 5/5/2023
Surprise! “Better Than Expected”
In the piece I wrote for The Weekly Update on 4/7/4023 (Read it Here) I suggested that the 1Q2023 earnings season for Corporate America, as measured by the S&P 500, would be “better than expected”!
Here are the current details as presented by Refinitiv Research as of April 30, 2023.
► The “upside surprise” or beat rates for Q1 ’23 S&P 500 earnings are quite strong, with the recent IBES by Refinitiv data showing the S&P 500 EPS beating by 7.7% as of Thursday's close, while S&P 500 revenue is beating by +1.5%.
► To help see the improvement: the Q4 ’22 S&P 500 EPS upside surprise rate was just 1%, while the S&P 500 revenue upside surprise was +1.6%.
► So far, 267 companies have reported Q1 ’23 earnings per Refinitiv, so the numbers will continue to evolve? The good news? Those reporting already include the major banks and the drag of additions to reserves for the "coming recession."
► The forward 4-quarter estimate for the S&P 500 increased $225.91 - and this is as we go through the "terrible" earnings season.
► The P/E ratio on the forward estimate is now 18.5x versus 3/31’s 18.6x and 12/31/22’s 17.2x. Take away FAANG and you fall to sub-14 P/E ratio (a measure of risk). Fantastic.
The banking industry issues are being worked out via the FDIC and the U.S. Treasury.
The U.S. will increase the debt ceiling and keep on moving.
Inflation is fast reducing down the far side of the bell curve.
And the Fed will likely “pause” interest rate increases at the June 14, 2023 meeting.
Once again, we are slaying monsters left and right. There will be more, so stay focused.
Our goal here at The WSG is to continue to nibble back thoughtfully, intentionally, and purposefully into the ownership of lower risk and lower volatility investments with the cash we hold from our thoughtful liquidations in early 2022.
Remember the old phrase, “Those who focus on the news think things have never been worse and those who study history think things have never been better”!
I’m interested in your thoughts, comments, and observations. Feel welcome to call, email, or stop by the office and say Hi.
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.