The R word
May 23, 2022
With more than 90% of US companies having published results, we can now conclude the Q1 2022 earnings season has been a surprisingly good vintage. Consensus expected earnings to increase 5% y-o-y, they increased by 11% in the end. We would however caution for 3 reasons: 1/ Companies have still been benefitting from a strong baseline effect coming out of the pandemic that will fade out over the next quarters 2/ the effects of monetary tightening are not in these numbers yet and 3/ the % of US companies mentioning the recession risk in their quarterly earnings calls is rising while the business confidence is falling. As there are tougher times ahead for companies, we stick in our investments to lowly valued companies with real pricing power.