Making Sense of Early Q1 Earnings Reports

Group 1: Q1 Earnings Overview - The Q1 reporting cycle is not fully underway, with major banks set to report on April 11, but early results from companies with fiscal quarters ending in February show mixed outcomes [1][2] - As of March 21, 14 S&P 500 members have reported February-quarter results, with another five expected to report soon, leading to nearly two dozen results by the time major banks report [2] - Current expectations for Q1 earnings indicate a year-over-year increase of +5.9% on +3.8% higher revenues, following a previous period of +13.8% earnings growth [8][18] Group 2: Company-Specific Performance - Nike's quarterly results initially led to a stock price increase, but investors later realized ongoing recovery challenges, resulting in a loss of gains [3][4] - FedEx reported disappointing results, missing both top and bottom-line expectations, and provided a lower guidance for the third consecutive quarter, indicating ongoing company-specific issues [4] - Lululemon's stock performance has been closely tied to consumer spending trends, with its shares down -15.6% year-to-date, compared to a -4.2% decline for the S&P 500 [12] Group 3: Market Sentiment and Economic Outlook - The market has shown a lack of enthusiasm for early Q1 results, with the percentage of companies beating EPS estimates at the lowest level in the past 20 quarters [13][17] - There has been a significant number of negative revisions to Q1 earnings estimates across various sectors, with the most notable declines in Conglomerates, Autos, and Consumer Discretionary [21][22] - Despite near-term risks, the overall corporate earnings picture has been improving, with expectations for continued growth momentum through 2027 [27][29]