As the Q3 earnings season unfolds, we provide an overview of the earnings landscape and a brief glimpse of the key takeaways:
Outlook: Contrary to initial concerns, S&P 500 earnings are poised for growth in 2023 and beyond, with positive revisions from notable players like Amazon, Meta, Alphabet, and Nvidia.
Expectations: Earnings are projected to exhibit a modest year-over-year decline of 0.3%. However, the possibility of a positive surprise can’t be overlooked, potentially elevating earnings into positive territory.
Analysts’ Optimism: Analysts have been steadily raising estimates for 2024, with an impressive, expected growth of approximately 12%. This optimism lays a promising foundation for future investments.
Valuations and P/E Multiples: The current S&P 500 forward P/E multiple, standing at 17.7x, remains within a reasonable range, just below the five-year average and slightly above the ten-year average.
Focus Areas: We’re closely monitoring several critical aspects, including the competitive landscape, the impact of higher interest rates, labor market conditions, currency fluctuations, and inventory levels.
Impact of Strong USD: With a robust U.S. dollar appreciating by approximately 7% since July, over 25% of S&P 500 companies with significant overseas sales may face unique challenges.
CFO Outlook: The outlook for 2024, as revealed by The CFO Survey’s third quarter results, brings promise with higher revenues, increased hiring, and controlled price and input cost hikes. However, monetary policy remains a central concern.
Quality and Resilience: Our commitment to managing macro risks focuses on quality investments that offer resilience and stability throughout market cycles.
As always, we’re here to guide you in making informed investment decisions. Feel free to reach out with questions or further insights you may have, and let’s navigate these markets together.
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