Although earnings appear set to tumble this quarter, a closer look suggests that investors shouldn't be completely fearful about stocks right now.
Weaker bottom-lines are also masking anticipated strength in sales growth, Credit Suisse found. Revenue for S&P 500 firms is forecast to rise 1.7% in Q1, Golub wrote, adding that technology is the only sector where top-line growth is supposed to be lower than it was in the first quarter of 2022. The issue for stocks is profit margins, which are expected to fall 9.9% across sectors.
While earnings will likely get off to a rocky start in Q1, they are set to rise consistently throughout the year and eke out a gain by the end of 2023, according to consensus estimates cited by Golub.
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