After the first week of earnings, analysts have tempered their expectations for profit growth, anticipating a continuation of the profit-declining trend.
Factset data indicates that out of the 17% of the S&P 500 companies that have reported so far, 73% have reported positive earnings per share (EPS) surprises, and 66% have reported positive revenue surprises.
Piper Sandler analyst Brent Bracelin anticipates Microsoft to guide to a slight improvement in core growth, driven by a non-cloud recovery in the December quarter. KeyBanc Capital Market’s Michael Turits expects overall in-line September quarter results from the software giant, exercising caution given the ongoing high-rate environment and macro concerns.
“Large channels we spoke to said they were in line or better relative to their expectations with Azure. C4Q Azure expectations were for similar growth,” he added.
For ad-dependent social media companies, the tepid ad-spending environment may present challenges. However, companies like Alphabet have other growth opportunities, including a presence in the cloud market and exposure to AI.
Data from Factset indicates that, among all the S&P sector classes, the communications sector is likely to report the largest year-over-year earnings growth, with Meta leading the charge.
Following the stock pullback in the September quarter, valuations have become compelling for most. Factset reported that the forward 12-month P/E ratio for the S&P 500 is 17.7, below the 5-year average of 18.7 but slightly above the 10-year average of 17.5.
See Also: Best Communication Services Stocks
Key earnings to watch for during the week are:
Monday (after the close)
Tuesday (before the market opens)
Tuesday (after the market close)
Wednesday (before the market opens)
Wednesday (after the market close)
Thursday (before the market opens)
Thursday (after the market close)
Friday (before the market opens)
The SPDR S&P 500 ETF Trust (NYSE:SPY), an exchange-traded fund that tracks the performance of the S&P 500 Index, ended Friday’s session down 1.23% at $421.19, according to Benzinga Pro data.
Read Next: Is It Time to Bet on Small Caps? Analysts Share Insights On The Valuation Gap Versus Large Caps
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