The beginning of the interim year may be very exceptional in the USA – War and inflation are eroding corporate earnings growth

In the United States, first-quarter earnings reporting in the United States next week could be very exceptional, writes the British newspaper Financial Times.

The beginning of the year has been marked by the war in Ukraine and the acceleration of inflation. This is inevitably reflected in the interim reports.

According to forecasts collected by FactSet, analysts expect S&P 500 companies to report an average 5.2 percent increase in earnings per share in January-March compared to January-March 2021.

The forecast already includes first-quarter results already reported in the United States and forecasts for those whose results have not yet been released.

The decline in earnings per share growth would be significant, as in the fourth quarter of 2021, S&P 500 earnings per share rose as much as 32 percent from the same quarter in 2020.

The realization of the forecasts would mean that the increase in earnings per share of US listed companies in January-March has been the smallest since the last quarter of 2020.

Instead, the companies’ turnover is on the rise. Average revenue growth in the S&P 500 is forecast to rise to 10.9 percent.

The contraction in average earnings per share and the strong growth in net sales mean that the operating profit margin of listed companies is forecast to fall by 0.05 percentage points to 11.8 percent.

United States Bank Goldman Sachs France Télécom points out that a combination of an average double – digit increase in turnover and a reduction in the average operating margin is a rare combination.

“If the forecasts come true, the first quarter of 2022 will be 2008 and the first quarter of 30 years, with the exception of the last quarter of 2011, will see a double-digit increase in revenue but a drop in operating profit,” Goldman Sachs recalls.

By Editor

Leave a Reply