Forecasting earnings acceleration

Our machines forecast that, in aggregation, S&P 500 companies will announce robust results in the third quarter of 2023. Most sectors show revenue acceleration, characterized by an improvement in year-over-year (YoY) revenue growth from the second to the third calendar quarter. Information technology and communication services sectors will deliver the most meaningful revenue acceleration. Only three sectors, financials, industrials, and consumer discretionary reveal revenue deceleration. Similarly, our algorithms predict an acceleration in aggregated earnings before interest, taxes, depreciation, and amortization (EBITDA) and in EBITDA margins.

Our algorithms indicate fundamentals growth is normalizing to pre-pandemic levels. We forecast the aggregated S&P 500 fundamentals because it offers a more comprehensive perspective compared to the average of individual growth figures (it would be unfair to combine the performance of a large company exhibiting 5% growth, with that of a smaller company boasting 50% growth, especially given the cap-weighted nature of the S&P 500). Valuation has been questioned and highly contested because the earnings growth remains uncertain. However, our algorithms show that not only will we see earnings growth this quarter, but we will also continue to see accelerating earnings growth for the next 3-4 quarters at least.


For OdinUltra.ai customers, you may view live updated fundamental forecasts by Sectors under the Forecasts tab.