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Earnings per share year-over-year growth and expectations, percentage

 

The chart is a bar graph of quarterly earnings per share growth on a year-over-year as a percentage starting in the fourth quarter of 2013 and ending with expected earnings growth in the fourth quarter of 2024.

 

The first data point in the chart is for year-over-year earnings growth up 11% from the prior in the fourth quarter of 2013. The chart doesn’t change much but begins trending downward and dips to -1% for a year-over-year earnings decline in the second quarter of 2015. The chart moves neutral before continuing to fall further with year-over-year earnings declining by -6% in the first quarter of 2016. From here year-over-year earnings growth begins to rise with earnings 15% from the prior year in the first quarter of 2017. The chart continues to trend upward with year-over-year earnings growth at 27% in the third quarter of 2018. The chart begins trending lower from this point with year-over-year earnings declining to a growth rate of 1% in the first quarter of 2019 and eventually drastically falling to a decline of -34% from the prior year in the second quarter of 2020. From here, year-over-year earnings begin trending up eventually skyrocketing to a growth rate of 59% from the prior year in the second quarter of 2021. The year-over-year earnings growth rate remains positive before turning negative with a decline of -3% in the fourth quarter of 2022. The chart then shows the expected earnings growth per share rate with an expected decline of -7% in the second quarter of 2023. From here, the expected earnings per share growth rate turns positive all the way through the last data point which is an expected 13% growth rate from the prior year in the fourth quarter of 2024.

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Top Market Takeaways Quick shot: How you doin'?

Ajene Oden

Global Investment Strategist

Published Jul 14, 2023
Top Market Takeaways Quick Shots

Banks, margins and the consumer: We think these are the three key things to monitor throughout the second quarter earnings season.

 

While we don’t see the banks as in the hot seat like they were in the first quarter of this year, we do think of them as a sort of bellwether for the economy as they provide insight into the consumer and credit conditions. Credit is like oxygen for the economy, and right now the Fed is trying to slow the amount of oxygen in order to cool the still-burning fire of inflation. Bright side, the U.S. is trending closer to the Fed’s 2% inflation target as of the most recent Consumer Price Index (CPI) from June which came in at 3%.

 

Now, how about them margins? Well, margins help investors assess profitability. Said differently, they help us understand how companies are managing revenues versus costs. Broad market consensus is for Q2 earnings to contract by roughly -7% from the prior year. While we expect earnings to be down this quarter, we believe that margins will hold up better than expectations, propelled by prudent expense discipline and pricing power from various companies.

 

As for the consumer? This is a consumer-driven economy. Consumer spending makes up about 70% of U.S. Gross Domestic Product (GDP). During earnings season, corporate CEOs host earnings calls and provide forward guidance on the coming 12 months. These calls can help investors understand how the business world is viewing the strength of the consumer. A consensus that the consumer is strong or a positive outlook on the economy may mean that growth is on the horizon.

 

The market seems high on optimism lately, but earnings are still expected to have contracted in the second quarter. We’ll be watching carefully as the earnings season unfolds but believe the upbeat nature in markets may be warranted – we think the results could surprise to the upside.

Markets expect a Q2 contraction but growth ahead

This bar graph shows quarterly earnings per share growth on a year-over-year
Source: Morgan Stanley, FactSet. Data as of July 7, 2023. 
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All market data from Bloomberg Finance L.P., 7/13/23.

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Ajene Oden

Global Investment Strategist

AJ Oden is a Global Investment Strategist for J.P. Morgan’s Global Investment Strategy team. AJ, in partnership with asset class leaders and the Chief Investment Officer and team, is responsible for developing and communicating the firm’ ...More

AJ Oden is a Global Investment Strategist for J.P. Morgan’s Global Investment Strategy team. AJ, in partnership with asset class leaders and the Chief Investment Officer and team, is responsible for developing and communicating the firm’s economic and market views and investment strategies to advisors and clients.

 

Prior to joining J.P. Morgan, AJ was a Senior Investment Strategist and official spokesperson for BNY Mellon Investor Solutions, with media appearances on CNBC, Bloomberg and Yahoo Finance. He was also a member of the investment team, helping to craft the business’s investment views. Like in his current role, AJ was responsible for providing market views and asset allocation insight to clients.

 

Before becoming an investment strategist, AJ worked in various BNY Mellon businesses including asset servicing, capital markets and relationship management. He was also a member of BNY Mellon’s associate rotational program.

 

AJ has a Bachelor of Science degree in marketing from Champlain College.

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