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Second Quarter Earnings Season is Here!  Should We Expect An Encore?

Financial Commentary
July 17, 2023
By Jonathan Smith
Securities Analyst

Second quarter corporate earnings season has arrived! The big banks reported on Friday beginning the official kickoff.  Earnings reports from a trio of big banks including JP Morgan, Blackrock, and Wells Fargo surprised investors by beating revenue and earnings estimates. Banks continue to benefit from interest rate hikes providing income boosts.

What is Earnings Season?

Earnings season happens quarterly for publicly traded companies. The seasons begin shortly after the end of the prior fiscal quarter, lasting nearly six weeks.  Each quarter, companies are required to report on their progress to analysts, investors, and the media, who formulate opinions of the progress. Traders pay attention to big movements in stocks from earnings reports, which may prompt buying or selling a position during the session.  Overall performance of corporate profits and sectors of the market provide clues as to the strength of the U.S. economy.

In the first quarter, results were strong as many companies surpassed analysts’ expectations; easing imminent fears of a widely anticipated recession. In addition to the strong earnings reports in the first quarter, the economy grew at 2% annualized rate as measured by Gross Domestic Product (GDP).  The strong U.S. consumer helped GDP as the rate nearly doubled the initial estimate of 1.1%.

After a Strong First Quarter, Can We Expect More of the Same?

As we enter into the second quarter earnings season, look for similar clues regarding an impending recession, or a first quarter repeat. Many analysts are predicting a slower growth pace than previous quarters.  Analysts and investors believe that corporate earnings will show lower projections as higher interest rates continue to affect businesses and consumers. There is optimism that the 2nd quarter earnings season will provide another surprise. Good news in this quarter earnings means good news for the economic outlook.


Source:  Bloomberg

The Security National Bank Wealth Management team view quarterly earnings from a long-term investing perspective. Earnings reports are good for fundamental investing as they affect short-term market movement.  While earnings are important, it is just a snapshot in time.  It is also important to evaluate the outlooks that go along with the earnings reports, as they provide insight into the direction of the economy and market sectors. Our focus remains on strong companies prudently selected in our portfolios that provide favorable risk/adjusted returns over the long-term. If you have questions about your portfolio positions, reach out to your SNB Wealth Advisor today. Your financial success matters to us!

 

 

About the Author

Jonathan Smith

Jonathan Smith is a Securities Analyst for the Security National Wealth Management team. He has more than 10 years of experience in the investment and financial field. He is a graduate of Briar Cliff University in Sioux City where he lives with his wife and growing family. In the community, Jonathan serves on multiple boards, including the Fiscal and Public Policy Commission for the City of Sioux City, Girls, Inc., the Siouxland Community Foundation and the Ronald McDonald House of Siouxland.

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