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Company Profits Are Doing Something Unexpected

With inflation, covid, war and rising interest rates, you might think you know where corporate profits are headed, but you may be surprised..
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Financial reports from America's public companies are coming in against a dismal backdrop of inflation, covid, rising interest rates and the biggest conflict in Europe since World War II.

By April 14 dozens of major companies will have released their results, including some of the largest publicly traded firms. One way or another, that will set the tone for rest of so-called earnings season.

The team at Action Alerts Plus has begun looking toward this quarter’s earnings reports. 

“The start of the quarter was impacted by the rise of the Omicron variant, something we've already been reminded about thanks to quarterly results from FedEx  (FDX) - Get Free Report  and Darden Restaurants  (DRI) - Get Free Report." the team wrote recently. "Those reports also reminded us inflationary pressures continued to rise in February, and those pressures were followed by renewed supply chains issues, additional pricing pressure, and sanctions tied to the Russia-Ukraine war and fresh lockdowns in China. And let's not forget about the Fed not only implementing its upward trajectory in monetary policy but more recently signaling it may need to be more aggressive than it first communicated."

All in all it was "quite a messy quarter, but here's the curious thing, compared to what they were on January 7 (before most of the above unfolded) at $223.48, as of last Friday consensus EPS expectations for the S&P 500 have risen to $227.37,” the team wrote.

That's right, Wall Street analysts see company profits for the first quarter coming in higher now than they did at the beginning of the quarter. 

The news might be a bit confusing, but at least it’s good! Despite concerns around the pandemic, global conflict, inflation and rising interest rates, earnings appear to be strong.

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