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Earnings Path Overview | Nasdaq

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By Matt Wagner, CFA
Associate Director, Research

All eyes are on corporate profits.

The collapses of Silicon Valley Bank (SVB) and Signature Bank in March led investors to pay close attention to first-quarter earnings for any further signs of distress in the banking sector and for signals of recession more broadly.

We have spent the last few months developing a tool called the Revenue Path as a way for investors to track earnings trends throughout the reporting season.

How to get there

All our tools are located in the PATH — Portfolio Analysis Tools Platform — drop-down list on the WisdomTree site. The Earnings Path is at the bottom of this drop-down menu.

Combined sales and profit growth

The tool’s default setting displays the S&P 500 Index summary of quarterly results for the current quarterly reporting season.
The selected tab — Growth (All) – shows a mix of actual reported sales and earnings growth with median analyst estimates as of the last business date.

The screenshot below was taken on April 27. The data includes actual sales and earnings growth for all companies that had reported first-quarter profits through April 26, combined with the latest analyst estimates.

At the level of the aggregate index, by adding up all the global sales And earnings in Q1 2023 vs. Q1 2022 – S&P 500 earnings are expected to see margin compression as sales are estimated to be up slightly from a decline in earnings.

Information Technology – which we believe has the largest weight in the index – is expected to experience slightly negative sales growth alongside a much larger decline in earnings.

Clicking on the index entity or one of the sector names displays a time series analysis of year-over-year earnings growth.

From this series, we see that the earnings growth forecast for Q1 2023 would be the second consecutive negative earnings growth for the index – usually referred to as an earnings recession – and the worst earnings growth since the COVID lockdowns. -19 in 2Q 2020.

Reported sales and profit growth

The next tab in the tool – Growth (reported) – is for actual reported earnings up to the last business date.

Through April 27, 43.7% of the index had reported earnings in the first quarter. Larger banks typically release their reports earlier in the reporting season, which can be seen by the financial services sector having one of the largest proportions of reported weight, at over 60%.

Financial services reporting on that date reported resilient earnings, with sales growth of 13.5% and earnings growth of 11%.

Sales and profit surprise

The final tab of the tool highlights surprise sales and earnings numbers – reports of actual sales and earnings compared to median analyst estimates.

Similar to the growth tab in the report, this tab will have greater statistical significance later in earnings season as more companies report earnings.

To date, 10 of the 11 sectors are posting a positive earnings surprise (real estate being the outlier).

Compare between indexes

The tool includes a diverse sample of indices to help provide perspective on earnings trends in different market segments.

For example, those who want to track earnings trends in a thematic universe like cloud computing can select the BVP NASDAQ Emerging Cloud Index from the drop-down menu.

Add our tool to your favorites!

We hope this tool can be a valuable resource for those wishing to track their income throughout the reporting period and that you will bookmark this tool link for easy access to daily data updates.

As with all of our PATH tools, we will continue to make improvements over time, such as adding indexes, export functions, and other unique ways to track revenue trends.

Initially published by WisdomTree on April 28, 2023.

For more news, information and analysis, visit the Modern Alpha Channel.


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