Earnings Season Update: Big Banks Outperform Expectations

Introduction:

The third-quarter earnings announcement season is officially underway. Earnings season is a crucial time for investors as it provides a glimpse into how companies are performing based on their financial results. The current season seems to be off to a strong start with many companies exceeding analysts’ expectations.

Positive Results:

• FactSet reports that 80% of S&P 500 companies that have released results so far have exceeded earnings expectations.
• The big banks, including JPMorgan Chase, Wells Fargo, Goldman Sachs, Bank of America, Citigroup, and Morgan Stanley, all posted better-than-expected earnings results.
• The average earnings surprise for these banks was an impressive 13.55%.
  

  Earnings Growth Outlook:
  

• FactSet anticipates that the S&P 500 will achieve much higher earnings growth than the current estimate of 4.1%.
• The average earnings growth rate for the S&P 500 is expected to be nearly 10% due to better-than-expected earnings results.
• Historically, the S&P 500 has posted an average earnings surprise of 6.8%, with 75% of companies surpassing analysts’ estimates.
  

  Ratings Changes:
  

• A total of 143 big blue-chip stocks were revised in the Stock Grader recommendations.
• Seventeen stocks were upgraded from a Buy to a Strong Buy, while forty stocks were upgraded from a Hold to a Buy.
• Thirteen stocks were downgraded from a Strong Buy to Buy, and twenty-nine stocks were downgraded from a Hold to a Sell.
  

  Top Strong Buy Stocks:
  

  1. AEE – Ameren Corporation
  2. ATO – Atmos Energy Corporation
  3. ATR – AptarGroup, Inc.
  4. DOC – Healthpeak Properties, Inc.
  5. ERIC – Telefonaktiebolaget LM Ericsson Sponsored ADR Class B
     

     Fundamentals for Profits:
     

• To make the most of this earnings season, focus on investing in fundamentally superior stocks.
• Stocks with strong earnings and sales growth potential are expected to lead the market higher in the upcoming weeks.
• Growth Investor stocks, characterized by high earnings growth and big earnings surprises, are likely to outperform.
  

  Conclusion:
  

  Earnings season presents a unique opportunity for investors to capitalize on the market’s reaction to companies’ financial performance. By staying informed and focusing on fundamentally strong stocks, investors can position themselves for success in the current market environment.

  Sincerely,
  Louis Navellier
  Editor, Market 360

  The Editor owns securities in General Dynamics Corporation (GD).