Four things to watch for this earnings season

By:
on Apr 11, 2024
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  • Tomorrow, the Q1 earnings season begins in earnest.
  • But what should you look out for, and what are analysts expecting?
  • We break down four things to keep in mind from tomorrow as earnings season begins.

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Tomorrow, April 12th, sees plenty of the bigger banks and financial institutions in the world (JPMorgan Chase and BlackRock among them) reporting their latest financial results.

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And, just like that, it’ll be the earnings season of Q1 for FY2025.

If you’re wondering what to watch out for during these financial results, you’re not alone. It can be difficult to see the forest for trees in the mass of data that is earnings season – and, in particular, it can be tough to determine the significance of a Q1 result compared with, say, Q4 financial results.

Here, we’ve broken down five things to look for – both in this earnings season in particular, and in general for a Q1 financial result.

1. A better Q1 than last year

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On the whole, inflation has come down since Q1 last year (although it has proved stickier than initially expected). Plus, both job creation and economic growth in the US looks promising compared with last year. And while rate cuts haven’t happened yet, they likely will still come some time this year.

Traditionally, all of these macroeconomic factors are associated with higher returns for equities, both in the US and beyond, so it’s not unreasonable to expect a better Q1 than last year, broadly speaking. Or, at least, a more positive forecast for FY2025 than we received in 2023.

2. Yearly outlooks and projections

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With Q1 results, the financial year has barely started, so why pay attention tot hem at all? One big reason is that many companies include forecasts and projections for the rest of the year in the Q1 report.

Keeping an eye on these outlooks will help you get a broad idea of what the company and its industry expects for the months ahead, as well as giving you a yardstick with which to measure other results later as the year goes on.

3. A tough time for bank stocks

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Financial data company FactSet recently forecast for this earnings season that banks are expected to post the most declines of any industry – an 18% drop in earnings, to be specific.

This makes some sense. Uncertainty over when rate cuts will appear this year, if any, looms over tomorrow’s results announcements. And with interest rates not yet lowered, defaults on payments are still putting banks under pressure while their clients battle risen inflation.

4. Continuing AI fervor

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Unlike banking, one sector that seems to not be slowing down in the slightest is everything tech that is specifically related to AI.

According to Fortune, UBS Global Wealth Management says that tech earnings should jump 18% this year as AI fever only continues.

With stocks like Nvidia and AMD still rising high, this feels likely.

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