The US second quarter earnings season kicks off this week with three banks and a big airline releasing results for the three months to June.
Analysts are upbeat, forecasting 20% earnings growth for the S&P 500 and a record $US125 billion or more in dividends for the June three months alone.
Attention will be focused on Friday with several big banks reporting before the opening bell, including Citigroup, JPMorgan and Wells Fargo.
As well a number of smaller banks are due to report this week, such as PNC Financial. Pepsi is a rare financial down to report as well.
Delta, one of America’s top four airlines is down to release its results on Wednesday. It will be closely watched for signs of the impact of the surge in oil prices on costs and earnings. It could be significant.
Warren Buffett will be one investors watching Delta’s figures – Berkshire Hathaway is now the biggest single investor in the big four airlines – Delta, American, united Continental and Southwest.
As of Friday, the S&P 500 is expected to report earnings growth of 20% for the second quarter.
FactSet reported at the weekend that “Based on the average change in earnings growth due to companies reporting positive earnings surprises, it is likely the index will report earnings growth above 20% for Q2, but below the 24.8% growth reported in Q1."
“Over the past five years, actual earnings reported by S&P 500 companies have exceeded estimated earnings by 4.4% on average,” FactSet analysts wrote in a weekend note to clients.
“During this same period, 70% of companies in the S&P 500 have reported actual EPS above the mean EPS estimate on average.
"As a result, from the end of the quarter through the end of the earnings season, the earnings growth rate has typically increased by 3.2 percentage points on average (over the past five years) due to the number and magnitude of upside earnings surprises.
“If this average increase is applied to the estimated earnings growth rate at the end of Q2 (June 30) of 20.0%, the actual earnings growth rate for the quarter would be 23.2% (20.0% + 3.2% = 23.2%),” FactSet explained..
“If the index does report growth of 23.2% for Q2 2018, it will mark the second consecutive quarter of earnings growth above 20% and the third consecutive quarter of double-digit earnings growth,”FactSet noted.
Meanwhile Australia’s June 30 earnings season doesn’t kick off until late this month into early August.
One of the first results for the 2017-18 financial year will come Wednesday from Mirrabooka Investments, which is linked to Australian Foundation Investment Co (which reports on July 23).