Goldman Sachs analysts weighed in on the earnings season so far, highlighting that the S&P 500's earnings per share (EPS) for the second quarter experienced a 4% year-over-year (YoY) decline.
This decline is better than the initial expectations at the beginning of Q2 the earnings season, which had anticipated a more significant 9% drop.
When examining the different sectors, the Consumer Discretionary category emerged as the standout performer, boasting an impressive earnings growth of 31%. This growth serves as a positive indicator of consumer activity and economic resilience within this sector.
In contrast, the Energy sector faced the most significant decline in profits, experiencing a notable drop of 51% in earnings. This contrast underscores the diversity in performances across sectors.
Looking ahead, Goldman Sachs reiterates its positive stance on future earnings. The firm’s forecast stands above consensus estimates, projecting an EPS of $224 for 2023, reflecting 1% growth.
Furthermore, the projection for 2024 anticipates an even stronger EPS of $237, indicating a 5% growth trajectory.
Goldman’s EPS projection is based on a less pessimistic view on the oil market with the analysts noting that “sustained high oil prices could lead to upward revisions to consensus EPS.”
In other words, the better-than-expected earnings could help the index continue grinding higher.