LONDON — Third-quarter results for the S&P 500 The quarterly earnings season has gotten off to a flying start, with positive earnings per share (EPS) numbers below recent averages.
As of today, 20% of S&P 500 companies have reported their third-quarter results. Over the coming week, 165 S&P 500 companies, including 12 Dow 30 components, are scheduled to report third-quarter results.
Of the 20% of S&P 500 companies that reported results, 72% reported positive EPS and 70% reported positive revenue. But according to John Butters, vice president and senior earnings analyst at investment analytics firm Set of factsThe S&P 500’s (blended) net profit margin for the third quarter of 2022 is 12%, which is lower than the prior quarter’s net profit margin and the prior year’s net profit margin. “If 12% is the actual net profit margin for the quarter, this will mark the fifth consecutive quarter in which the index’s net profit margin has declined quarter over quarter,” Butters said.
A market that shows continued but slowed growth is a source of concern but also optimism according to Pierre RupertPh.D., professor of economics at the University of California, Santa Barbara (UCSB), director of the Economic Forecasting Project and associate director of the UCSB Global Economics and Finance Lab. “The market has been quite volatile and analysts have been lowering their earnings forecasts. That said, hotels have continued to beat estimates and travel overall is up. However, the very different industry results make it difficult to get an overall reading,” he said.
Related: GBTA Research Shows Promising Outlook for Business Travel
Seven sectors posted net profit margins in the third quarter of 2022 above their five-year average, led by the energy sector (14.6% vs. 6.8%). In contrast, four sectors posted net profit margins in the third quarter of 2022 below their five-year average, led by the financial sector (14.9% vs. 16.5%).
“The economy remains strong in many ways. The labor market remains as strong as it has ever been. There are more open jobs than unemployed people. Nominal wages are growing at a faster pace than we have seen in the past decade. Third-quarter GDP Estimate “The results have exceeded all estimates, with a 2.6% increase,” Rupert said. “Households have much lower debt as a percentage of disposable income than we have seen over the last 20 years. All of that points to a positive trajectory. The flip side is inflation and what the Fed is going to do.”
The travel industry is poised for solid gains, but should expect slower growth. simplywall.stThe Sydney, Australia-based investment research firm expects annual earnings growth of 10.4% in the hospitality sector. However, this is well below the 65.3% annual growth of the previous year. The firm forecasts growth of 29.3% for hotels, resorts and cruise lines and 10% for casinos and gaming.
The airlines sector reported a profit of $2.9 billion in the third quarter of 2022, compared to a loss of $731 million in the third quarter of 2021.
Although no trade show companies have yet released their third-quarter reports, PCL Information announced strong revenue growth of 59.1% in its 2022 half-year results report published in August. In the report, Stephen A. Carter, Group Chief Executive Officer of Informa, said: “As noted in our recent market update, the first “The half-year results underline the benefits of our GAP II strategy, with strong growth in revenue, profits and cash. We remain on track to achieve our 2022 guidance, with good visibility across subscriptions, exhibitors, delegates and digital services, while continuing to deliver accelerated shareholder returns, additional growth investments and further targeted expansion.”
While the threat of a recession is ever present, Rupert shares Informa’s optimistic view that the trade show industry as a whole can remain optimistic. “Travel is up and demand for hotel space is extremely high,” he said. “If we’re not in a recession right now, we’re heading towards one. Simply put, recessions are a common occurrence and it’s very difficult for anyone to predict turning points. But the underlying economy is strong and the low levels of corporate and household debt tell me that even if things slow down, we’re in a much better position to weather the storm.”
Contact John Butters at jbutters@factset.com; Peter Rupert, Ph.D. at peter.rupert@ucsb.edu