Rising interest rates and the Fed’s decision “Destroy the World” Cooling down the S&P 500. But some fast-growing companies are trying to weather it, analysts say.
8 stocks in the S&P 500 (including consumer goods) MGM Resorts (MGM), material company Albemarle (ALB) and financial progressive (PGRS&P Global Market Intelligence and market smithBoth are expected to increase adjusted earnings by at least 150% in the just-finished third quarter. In addition, profits for all companies are also up from the second quarter.
Positive earnings could be one of the only things that keeps the S&P 500 alive. said Jason Brady, president and CEO of Thornburg Investment Management. “If the results are a little better than expected, we should see some easing in the short term.”
S&P 500 investors brace for slow growth
the investor keep an eye out for good news During earnings season — kicking off in earnest this week.
Only 10% of the companies in the S&P 500 reported earnings in the third quarter, according to FactSet’s John Butters. And so far it’s not pretty. Rising interest rates are beginning to sink, slowing the economy and earnings growth for most businesses.
According to Butters, the S&P 500’s earnings grew just 1.6% in the quarter. This is the lowest growth rate since the third quarter of 2020 and below what analysts were asking for when the reporting season began.
Also, most of the S&P 500 sectors are expected to see lower earnings. “Four of the 11 sectors have seen year-on-year gains, led by energy, industrials and real estate,” said FactSet’s John Butters. “On the other hand, seven sectors are reporting or expected to report year-on-year revenue declines, led by the financials, telecommunications services and materials sectors.”
However, a handful of S&P 500 companies have snorted at the Fed’s aggressive move and are just fueling significant growth.
Faster growth despite the Fed
Sin City has long evaded reality outside Nevada. And MGM Resorts is doing it again.
Las Vegas casino operators, including Mirage, are behaving as if interest rates never went up. The company’s third-quarter adjusted earnings per share are expected to reach 24 cents per share. If the analyst is correct, he will record more than 700% growth year-over-year. That’s a strong growth acceleration of 123% in the second quarter, which is impressive as earnings climbed from his 13-cent loss to 3 cents a share.
However, investors are still not convinced earnings growth will continue. MGM stock is down more than 28% this year. But another explosion in quarterly earnings will help convince investors still skeptical that the growth is real. MGM plans to report third-quarter results on November 2nd.
S&P 500 Investors Prefer Accelerating Earnings Growth
But investors are already embarking on big growth for lithium seller Albemarle. The S&P 500 stock is up nearly 6% in his year and the S&P 500 is down nearly 20%. what’s the good news? Analysts believe the company will report earnings of $6.97 per share, up 564% from his November 2nd. This is even stronger than the 288% profit growth reported in the second quarter.
Shares of insurer Progressive have risen further this year, rising nearly 17%. It’s easy to see why. The company’s Nov. 16 earnings report showed earnings increased 552% in the third quarter. This is a significant acceleration from his 11.1% adjusted earnings growth in the company’s second quarter.
It is true that we should not fight the Fed. But some S&P 500 companies find ways to grow around it.
Accelerating S&P 500 Gains Despite Fed
Q3 profit rose more than 150% in Q3, outpacing Q2 growth
|Company||symbol||2nd Quarter 2022 Earnings % ch.||Profit growth forecast for the third quarter||sector|
|MGM Resorts||(MGM)||123.1%||710.3%||Consumer discretion|
|live nation entertainment||(Liv)||173.3||462.3||Communication service|
|Ram Weston||(LW)||47.7||152.1||Daily necessities|