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Advisors - April 11, 2022

Earnings Season Playbook: Q1 2022 Reports To Watch

Earnings season rolls around four times a year and brings with it a frenzy of information. After a year of strong earnings reports in 2021, the first results of 2022 may be a bellwether for the year to come. This rings especially true given how the major averages have sunk into correction, and even bear market, territory in the first quarter of 2022. As such, earnings season requires extra market monitoring, due diligence, and attention to detail compared to other times of the year. It’s also just pretty fun.

Earnings Season: the months of the year during which most companies release quarterly earnings reports to the public, notably earnings-per-share (EPS) and revenue; usually January, April, July, and October.

Whether you like to “trade earnings” (buying or selling stocks based on their quarterly results) or you’re more of a passive investor, knowing the top names to watch this earnings season can help inform your approach for the quarter and year ahead. Whichever you are, here’s a quick refresher before the onslaught of new information that earnings season brings.

Click to jump to a specific section:
Earnings from Market-leading Sectors
Earnings from Market-lagging Sectors

Biggest Earnings Beats of Q4 2021
Biggest Earnings Misses of Q4 2021
Companies on an Earnings Beat Run
Companies on an Earnings Miss Run
Stock Earnings Calendar
Corporate Profits at the Market Level
Using YCharts to Navigate Earnings Season

 

Upcoming Earnings to Watch

Thousands of companies will share their financial results with the public this earnings season, but for varying reasons, only some will make it into the headlines. In an attempt to cut through the noise, these lists take a data-driven approach to identifying companies to follow this earnings season.

 

Leading Sectors of 2022 and Major Stocks

With the exception of Energy and Utilities, 2022 has not been kind to stocks so far.

Energy stocks benefited when oil prices blasted through $100 per barrel late in Q1, as depressed US Crude Oil Production combined with the ongoing conflict between Russia and Ukraine to increase scarcity. Though sensitive to Fed rate hikes, utilities stocks have been appealing to investors in search of an escape from the cyclical sectors, which are down so far in 2022.

Q1 2022 Stock Market Sector Performance

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Exxon Mobil (XOM) and Chevron (CVX), two well-known integrated oil-and-gas companies, together comprise 36% or more of leading energy ETFs like XLE, IYE, and VDE. As such, their Q1 reports could play a role in determining the sector’s prospects for the rest of 2022. With WTI and Brent oil prices up 42.8% and 48.2% YTD respectively, many will be looking for guidance as to whether or not current price levels are sustainable. Both Exxon and Chevron will report financial results on April 29th, 2022. (est.)

Exxon Mobil (XOM) and Chevron (CVX) share price and earnings estimates through Q1 2023

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Big utility players NextEra Energy (NEE) and Duke Energy (DUK) report earnings on April 21st (est.) and May 10th (est.), respectively. Large earnings surprises are rare for these big-dividend payers who boast steady share prices, EPS, and earnings estimates. However, with fixed income yields rising rapidly, shares of major utility players could be in for a rude awakening as the often-regarded bond substitutes face competition from the bond market itself.

NextEra Energy (NEE) and Duke Energy (DUK) share price and earnings estimates through Q1 2023

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Lagging Sectors of 2022 and Major Stocks

On the flip side, Consumer Discretionary and Communication Services sectors are market laggards so far in 2022, with both sectors being down 13% at the time of publishing. Coming into earnings season, these sectors are facing headwinds that have sent markets lower in 2022, such as inflation, volatility from geopolitical concern, and growth-stunting rate hikes.

In February, Facebook parent company Meta Platforms (FB) recorded the largest single-day price drop in not just its own history, but also in the entire history of U.S. public markets. A Q4 EPS miss followed by weak guidance on ad revenue (largely due to Apple (AAPL) iPhone privacy changes) wiped away all gains FB had attained since the pandemic—and then some. As for Alphabet (GOOGL), a more diverse business model and consistently better-than-estimated earnings reports have helped it weather the current macroeconomic storm. Can Alphabet repeat that relative success in its Q1 earnings report on April 27th, 2022 (est.)?

Meta Plaforms (FB) and Alphabet (GOOGL) share price and earnings estimates through Q1 2023

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Amazon (AMZN), the world’s largest online retailer, set a record-high quarterly EPS of $27.75 in Q4 2021. Despite this feat, AMZN stock also succumbed to the macroeconomic woes of inflation, potential rate hikes, and general volatility that have plagued cyclical stocks. As of late, however, the share prices of both Amazon and Tesla (TSLA) have been surging past their highs from late 2021. A fun fact: Amazon and Tesla together make up 46% of the SPDR Consumer Discretionary (XLY) Sector. The market caps of Tesla and Amazon could be materially altered based on their respective April 20th and April 29th (est.), 2022 earnings reports, and likewise their weightings in ETFs like XLY.

Amazon (AMZN) and Tesla (TSLA) share price and earnings estimates through Q1 2023

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Biggest Earnings Beats of Q4 2021

Looking at earnings reports from Q4 2021—the most recent data available—there were 15 companies between the S&P 500 and Nasdaq-100 that beat consensus estimates by 100% or more.

Can these names, who doubled analyst expectations in the most recent quarter, continue their winning ways this earnings season?

 

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Biggest Earnings Misses of Q4 2021

The same Q4 reports from July’s earnings season can also be used to identify names at the bottom of the barrel. Last quarter, 23 companies from the S&P 500 and Nasdaq-100 reported EPS figures that were 20% or more below estimates. If these were isolated performance lapses, could these names be poised to surprise the street this earnings season?

 

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Companies on an Earnings Beat Run

Combining the constituent lists of the S&P 500 and Nasdaq-100 indices results in 529 unique companies, 149 of which have beat EPS targets in each of the last eight consecutive quarters. With 28% of those 529 companies on such a long and positive earnings run, three names have distinguished themselves further by beating analyst EPS targets by 100% or more, on average:

 T-Mobile US

 Fox Corp

 Datadog

 

T-Mobile US

T-Mobile US (TMUS), the telecom giant serving ~30% of the U.S. retail wireless market, has beaten the street’s expectations by an average of 282.7% over its last eight earnings reports. Though the stock has been as much as 12.8% in the red in 2022, a Q4 earnings surprise of a whopping 1179.1% helped turn T-Mobile around: TMUS was up 11.2% at the end of Q1. With the company pledging another $3 billion investment into enhancing its 5G network by way of securing more mid-band spectrum, investors are hoping for more smashing results when T-Mobile reports Q1 earnings on May 4th, 2022. (est.)

T-Mobile (TMUS) share price and earnings estimates through Q1 2023

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Fox Corp

Fox Corp (FOXA), now a stripped-down version of the former Twenty-First Century Fox after selling assets to Disney, has outpaced EPS estimates by an average of 271.5% over eight consecutive quarters. In Q1 2022, the company successfully expanded Fox News International to new streaming platforms such as Roku and also received upgraded price targets from Morgan Stanley, RBC, and Deutsche Bank. FOXA shares have been relatively volatile since Q2 of 2021, so watch price action closely in the days surrounding Fox Corp’s Q1 earnings report on May 5th, 2022. (est.)

Fox Corp (FOXA) share price and earnings estimates through Q1 2023

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Datadog

Datadog (DDOG), a security monitoring platform for cloud applications, has wowed with an average earnings surprise of 271.5% over the last eight quarters. As a hyper-growth technology company, Datadog has been caught in the throws of Q1’s market selloff, tumbling as much as 29.7% before pinballing back to even on the year. Six weeks ago, nine research firms awarded price target increases to Datadog, and just recently the company became a partner with Microsoft in its Azure Cloud Adoption framework. Time will tell if these tailwinds, coupled with the stock’s current pre-earnings runup, will be enough to combat the forces of rising bond yields and higher inflation when Datadog releases its Q1 earnings report on May 6th, 2022. (est.)

Datadog (DDOG) share price and earnings estimates through Q1 2023

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Companies on an Earnings Miss Run

While over a quarter of S&P 500 and Nasdaq-100 companies have strung together eight EPS beats going back to Q1 2020, and no company has missed earnings every quarter in the same stretch, only two companies have fallen short of consensus EPS targets in seven of the last eight quarters.

 Carnival

 PPL Corp

 

Carnival

We all know that few industries have had a tougher time since 2020 than Travel & Leisure. And a company that has perhaps suffered more than any other since March 2020 is Carnival Corp (CCL).

The cruise line operator has missed EPS expectations by an average of 23% over its last seven earnings reports. Carnival’s next quarterly report won’t be available until June 24th (est.), as the company just released its most recent earnings on March 22nd. The chart below shows that future EPS estimates for Carnival continue rising, but the gap between actuals and estimates has widened with the last few earnings reports for CCL.

Carnival (CCL) share price and earnings estimates through Q1 2023

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PPL Corp

PPL Corp (PPL) is a holding company of regulated electric utilities located in Pennsylvania and Kentucky. In seven of the last eight quarters—a 0.2% positive earnings surprise was achieved in July 2020—PPL’s average earnings miss was 16.1%. Despite being a “defensive” name, the stock was still down by as much as 15.3% in Q1 and remains negative YTD. Though some time remains before PPL’s earnings call on May 6th, 2022 (est.), shares have recently rebounded in a sharp “V-shaped” manner.

PPL Corp (PPL) share price and earnings estimates through Q1 2023

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Stock Earnings Calendar

To keep you organized this earnings season, this calendar provides scheduled reporting dates for all 46 names mentioned in this post. A similar earnings calendar can also be created in YCharts for all stocks, or constituents of specific indices.

Tuesday, April 19, 2022
Prologis (PLD) 

Wednesday, April 20, 2022
Tesla (TSLA) 

Thursday, April 21, 2022
NextEra Energy (NEE) 

Tuesday, April 26, 2022
Equity Residential (EQR)
Essex Property Trust (
ESS)

Wednesday, April 27, 2022
Alphabet (GOOG, GOOGL)
American Tower (AMT)
Boeing (BA)
Meta Platforms (FB)

Thursday, April 28, 2022
Apple (AAPL)
AvalonBay Communities (AVB)
Digital Realty Trust (DLR)
Discovery (DISCK)
Ford Motor (F)
Southwest Airlines (LUV)

Friday, April 29, 2022
Amazon.com (AMZN)
Chevron (CVX)
Exxon Mobil (XOM)
Gilead Sciences (GILD)
LyondellBasell Industries NV (LYB)
Royal Caribbean Group (RCL)

Monday, May 2, 2022
Clorox (CLX)
MGM Resorts International (MGM)

Tuesday, May 3, 2022
Caesars Entertainment (CZR)
Marathon Petroleum (MPC)
Paramount Global (PARA)
Regency Centers (REG)

Wednesday, May 4, 2022
Host Hotels & Resorts (HST)
Incyte (INCY)
Pinnacle West Capital (PNW)
Realty Income (O)
T-Mobile US (TMUS)
Under Armour (UAA)

Thursday, May 5, 2022
Fox Corp (FOXA)
MercadoLibre (MELI)
Penn National Gaming (PENN)

Friday, May 6, 2022
Live Nation Entertainment (LYV)
Match Group (MTCH)
Datadog (DDG)
Norwegian Cruise Line Holdings (NCLH)
PPL (PPL) 

Tuesday, May 10, 2022
Duke Energy (DUK)

Friday, May 13, 2022
Airbnb (ABNB)

Thursday, May 26, 2022
Pinduoduo (PDD) 

Thursday, June 2, 2022
Splunk (SPLK)

Friday, June 24, 2022
Carnival (CCL)

 

Corporate Profits at the Market Level

Since the March 2020 bottom, equities have rallied due to strong corporate profits and surrounding exuberance. Even with headwinds of supply chain crunches and rising costs for businesses—the second-highest number of S&P 500 companies in history cited “supply chain” on Q4 2021 earnings calls—companies have still found a way to beat analyst estimates. In fact, analysts have the most buy ratings on S&P 500 stocks since at least 2010, according to FactSet, despite the market downturn in Q1. 

According to Standard & Poor’s, the composite EPS for all S&P 500 stocks reached an all-time high of 49.6 in Q3 2021, but is estimated to cool off to 47.4 for Q1 2022. However, looking toward the out years, composite S&P 500 earnings are currently forecasted to climb 24% higher by Q4 2023.

S&P 500 EPS and Forward EPS Estimate through December 31st 2023

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While market-level EPS is on the rise, some are worried it’s being outpaced by rising prices. The S&P 500 price-to-earnings (P/E) ratio rose throughout all four quarters of 2020, but regressed to the historical average through 2021. The S&P 500 PE ratio is forecasted to be 21.1 for Q1 2022, on the expectation that aggregate S&P 500 earnings growth outpaces the index itself. Additionally, systemic price corrections in Q1 may have helped keep those S&P 500 PE ratio forecasts in check. (On a side note, both the previous and following charts really put the severity of the 2008 Financial Crisis into perspective.)

S&P 500 PE Ratio and Forward PE Ratio Estimate through December 31st 2023

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Using YCharts to Navigate Earnings Season

Find companies on an earnings beat run

To find companies that have beat analyst expectations over consecutive quarters, use Timeseries Analysis to quickly compile and align data like EPS Surprise, Forward EPS Estimates, and Actual EPS. Because companies report financial results on different days throughout earnings season, format unlike data by clicking “Frequency” then select “Market Quarterly” to align all EPS data to the standard quarter-ends.

earnings season timeseries analysis

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Armed with properly formatted data, click “Export” then either “Export Data” or “Export to Excel Add-in” (if using the YCharts Excel Add-in, the spreadsheet will be linked to YCharts and automatically update when new data becomes available). From here, you can layer additional formulas to identify which names have a streak of beating expectations.

If you spot a company of interest, use the Earnings Chart Quickflow to dig deeper by visualizing the company’s historical EPS beat and miss trends—and how the share price has responded. The Quickflows Menu is accessed via the blue tab on the right-hand side of YCharts.

Find companies with the biggest earnings beats and misses

Want to see which companies outpaced the street’s expectations? Or find opportunities in names that sold off after an earnings miss?

Use the Stock Screener to find companies with a positive Earnings Surprise and compare their data side-by-side. In the Stock Screener, add either a broad market index, like the S&P 500, or a more targeted list, such as your portfolio holdings, by clicking “Modify” and toggling between the “Equities” and “My Lists” menus. Then click “Add Filter” and type to search for “EPS Surprise” or related metrics, and set a range or equation for its value.

EPS surprise filter stock screener

Click the screen’s name in the upper left corner to save, and distribute to colleagues by clicking “Share” in the upper right corner.

Create a custom earnings season calendar

Click “Data” in the top navigation bar, then “Events Calendar”. From here, a stock earnings calendar can be created by unchecking all Event types except “Earnings”. In the upper left corner, click “Select a List” to filter the calendar by stock style, index, sector, and more.

earnings season calendar

Modify a Stock Earnings Calendar in YCharts

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