By: Dividend Sensei
Last year we saw earnings crashes that had to be seen to be believed.
And this year, we’re seeing the opposite, which is why the S&P 500 just smashed the record for the fastest doubling from bear market lows.
Both to keep enjoying strong long-term profits in late 2021 and 2022, but also to avoid painful and costly mistakes in the coming months and years.
Fact 1: This Was A Historically Glorious Earnings Season
Q2 2021 represents the 2nd best earnings season in recorded history, at least as far as FactSet is concerned.
With 91% of companies reporting, 87% have beaten sales expectations, the highest ever recorded.
And those beats were despite incredibly high expectations.
The revenue surprise percentage for Q2 2021 of 4.9% is also above the trailing 1-year average (+2.8%) and the trailing 5-year average (1.2%). In fact, the second quarter will mark the highest revenue surprise percentage since FactSet began tracking this metric in 2008.” – FactSet Research
Just how great was sales growth in the last year?
For Q2 2021, the blended earnings growth rate for the S&P 500 is 89.3%. If 89.3% is the actual growth rate for the quarter, it will mark the highest year-over-year earnings growth rate reported by the index since Q4 2009 (109.1%).” – FactSet Research
Earnings growth has been explosive, and analysts still haven’t caught up. Every week estimates are rising and every quarter companies continue to beat them by impressive amounts.
(Source: FactSet Research)
Despite the incredible growth in 2021, next year’s growth, for both the top and bottom line is expected to also be above-average.
Net margins, currently at 13.0%, an all-time high, are expected to get even better.