NVQ - A Quick Look At Expected Q2 2023 S&P 500 Earnings And Revenue Growth

2023-06-20 20:35:00 ET

Summary

• Q2 ’23 earnings for the SP 500 starts in about 3 – 4 weeks, and will start with the financial sector kicking things off for Q2 ’23.
• Financials: Expected EPS and revenue growth, holding up very well despite the SVB issues.
• Health Care: Been negative all year, and UNH last week confirmed the poor EPS projections.

Q2 ’23 earnings for the S&P 500 start in about 3 to 4 weeks and will start with the financial sector kicking things off for Q2 ’23.

Here’s a quick look at expected S&P 500 revenue and EPS growth by sector :

Expected YoY revenue growth by sector:

• Financials: +7.4% expected on June 16th vs. +7.5% on May 26th ’23.
• Consumer Disc: +6.4% expected on June 16th, versus +6.3% on May 26th ’23.
• Real Estate: +3.7% expected June 16th, vs +3.7% on May 26th, ’23.
• Communication Services: +2.8% expected on June 16th ’23, vs +2.8% on May 26th ’23.
• Cons Staples: +2.6% expected on June 16th vs. +2.6% on May 26th ’23.
• Health Care: +2.6% expected on June 16th ’23, vs. +2.6% on May 26th ’23.
• Industrials: +2.4% on June 16th vs. +2.3% on May 26th ’23.
• Technology: -1.7% on June 16th, vs. -1.7% on May 26th ’23.
• Utilities: -2.1% on June 16th vs. -0.9% on May 26th ’23.
• Basic Materials: -8.2% on June 16th vs. -7.6% on May 26th ’23.
• Energy: -24.9% on June 16th, vs. -24.3% on May 26th ’23.
• S&P 500 revenue growth: -0.6% expected on June 16th, versus -0.5% on May 26th ’23.

Expected YoY EPS growth by sector:

• Consumer Disc: expected 26% on June 16th, vs. +25.2% expected on May 26th.
• Financials: +9.7% on June 16th vs. +10.7% expected on May 26th.
• Communication Services: expected +9.3% on June 16th vs. an expected 95% on May 26th.
• Industrials: expected +6.2% on June 16th vs. an expected +5.9% on May 26th.
• Utilities: +2.8% expected on June 16th vs. +0.3% expected on May 26th.
• Cons Staples: +1.8% expected on June 16th, vs. +2.6% expected on May 26th.
• Technology: -3.3% expected on June 16th, vs. -3.9% expected on May 26th.
• Real estate: -4.9% expected on June 16th, vs. -4.8% expected on May 26th.
• Health Care: -15.7% expected as of June 16th vs. -15.5% expected on May 26th.
• Basic Materials: -27.4% expected on June 16th, vs. -27.2% expected on May 26th.
• Energy: -44.4% expected on June 16th, vs. the -43.2% expected on May 26th.
• S&P 500 EPS growth: expected -5.6% on June 16th, vs. -5.4% expected on May 26th.

A deeper dive on the stats: The bigger issue is the 2nd quarter every year since 2020, when Q2 ’20 was the worst of the Covid lockdowns. That’s presented a problem for year-over-year (YoY) compares since Q2 ’20 was so bad. Here’s a look at second quarter results in aggregate, starting with 2020:

• Q2 ’20: S&P 500 revenue fell -8.7% while S&P 500 EPS fell -30.6%.
• Q2 ’21: S&P 500 revenue rose +25.2%, while S&P 500 EPS rose +96%.
• Q2 ’22: S&P 500 revenue rose +13.6%, while S&P 500 EPS rose 8.4%.
• Q2 ’23: (expected): S&P 500 revenue -0.6%, S&P 500 EPS -5.6%.

By sector, here are a few thoughts to ponder:

Financials: Expected EPS and revenue growth holding up very well despite the SVB issues. Remember though, JPMorgan ( JPM ) and the bigger banks count for a far bigger “earnings weight” than the regionals.

From a “move the needle” perspective on S&P 500 EPS, regionals account for very little. Until the yield curve starts to normalize in terms of its slope, financials will probably underperform, but relative to the rest of the 10 sectors within the S&P 500, the numbers aren’t bad.

Health Care: Been negative all year, and UnitedHealth ( UNH ) last week confirmed the poor EPS projections. Tajinder Dhillon of Refinitiv confirmed to me last week that UNH’s earnings weight in the S&P 500 was +1.2%, now exactly in line with its market cap weight of 1.2% per Morningstar data.

Commodity sectors: Energy one year ago was the star, and now readers can see how it’s at the bottom of expected S&P 500 EPS and revenue growth. Basic Materials too.

Technology: Given the tech sector's returns YTD, bet you didn’t expect to see negative EPS and revenue growth expected for the tech sector in Q2 ’23.

This blog tracks all of the EPS and revenue growth data by sector going back to just after 2008.

In Q1 ’23, revenue was expected to fall 5%, instead upside surprises have nearly brought it flat YoY so expected -0.6% revenue growth for Q2 ’23, should ultimately see +2% to 3% revenue growth, with slightly softer upside surprises.

Take all of this data with a grain of salt and some healthy skepticism. It’s just one quarter’s data, and it’s mostly sourced from IBES data by Refinitiv. Past performance is no guarantee of future results.

None of this data may be updated and if it is updated, may not be updated in a timely fashion. This data changes daily too. It’s also one person’s opinion, and none of it represents advice. Each reader should measure your own appetite for volatility.

Thanks for reading.

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Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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