US corporate earnings fared better than expected; know whats in store for US market investors!

Almost 76 per cent of the announcements reported a positive EPS surprise while 66 per cent reported a positive revenue surprise

Off late, investing in US stocks has become quite popular amongst the Indian investor community as it extends exposure to the growth avenues available to these companies. In addition to this, one also gets to geographically diversify their investment portfolio thereby, reducing the overall risk.   

So, here is the comprehensive view of the US corporate earnings, which will help investors to get an idea of how Q2 2022 fared.   

Around 56 per cent of S&P 500 companies have announced their Q2 2022 results, so far. Almost 76 per cent of the announcements reported a positive EPS surprise while 66 per cent reported a positive revenue surprise. Both S&P 500 and Nasdaq have rallied 10 per cent & 15 per cent, respectively since the earnings season kicked off.   

Kristal.AI has recently shared some of the insights and surprises from the corporate earnings season for the US:  

· Netflix announcement was a surprise wherein, the stock rallied 8 per cent even after losing one million subscribers! Street was expecting the dip to be two million for the quarter.  

· During the period of June 30 to July 29, nine out of 11 sectors witnessed a decline in the average EPS estimates for Q3’22, hinting at rough tides ahead. No points for guessing, the two outliers remain energy and utilities.  

· Out of 55 companies that are on Kristal.AI platform and which also, announced earnings last week, 55 per cent reported a positive EPS surprise. However, in terms of percentage points, negative surprises were more than positive surprises.  

· Apple and China’s impact: China’s slowing demand remains an area of concern for investors as buyers reduced spending in a turbulent economic environment. It should be noted that China contributed around 18 per cent of Apple’s revenue in the previous quarter.  

· Alphabet and its volatility: Snap Inc., which reported a decline in the ad revenue, saw the heat soon after the results were announced and fell more than 39 per cent in a day. On the other hand, Alphabet reported an increase in its advertising revenue. Google parent is better insulated than others from the sector headwinds, which is mainly because of its reach to an average internet user. Though not a major contributor to revenues yet, Google’s Cloud service offers a diverse stream of revenue from traditional advertising.  

· Coca-Cola and the win against inflation: One sector that has fared well after energy and utilities against the macroeconomic environment & market volatility is consumer non-cyclical. Coca-Cola beat the earnings estimates and lifted 2022 revenue guidance. Demand for sugary sodas and packaged food remains strong despite the 40-year-high inflation.