As the pivotal fourth-quarter earnings season kicks off Friday, there appears to be a tug-of-war being waged on Wall Street.
With the S&P 500 SPX rallying more than 11% over the past three months, the bulls seem to have the advantage. But there are also reasons to believe the bears could regain control once the flood of earnings reports kicks off before Friday’s opening bell with a host of big-bank earnings. Although consensus EPS estimates are usually lowered during the quarter, the fourth-quarter estimate was lowered much more than historical averages amid growing concerns that a recession was coming.
2023 guidance has already been cut by a lot, but should probably be cut even more As analysts cut their estimates for the fourth quarter, they usually also trim their views for the next year. Over the past five years, the average decline during the fourth quarter in bottom-up EPS estimates for the next year has been 0.2%, and over the past 10 years, that average decline has been 1.3%, FactSet’s Butters said.
The dollar amount of sales a company reports is a function of the number of products sold, or volume, and the price that product is sold for. And there’s reason to believe that while sales might show growth, many companies may be selling fewer products.Conagra Brands Inc. CAG , with food brands including Hunt’s, Duncan Hines, Slim Jim and Birds Eye, earlier this month reported sales for the quarter through November that rose 8.3% from a year ago to $3.
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