The season of publication of financial results is about to start - more important than usual

The most important season of publication of the results of listed companies in years is ahead of us. Due to the high nervousness in the market, the results of companies remain very important to the overall sentiment. After the previous record quarter, expectations are now more subdued, although still optimistic.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.

Eyes on Wall Street (and more)

On Wednesday, the season of publication of companies' results for the third quarter in the US and worldwide begins. The moment is special due to the high level of nervousness on the market. Investors are much more sensitive to the inflow of new information, which makes this season particularly important. Compared to the previous quarter, concerns about earnings growth as a derivative of overall growth are greater and performance expectations lower.

In the previous quarter (results for the second quarter of 2021) we saw record results. 431 out of 500 companies from S & P500 index. The companies' margins also reached a record level - 13 percent, and combining this with the production and sales recovering from the pandemic, it resulted in the best financial results of companies in years. Analysts' expectations were significantly beaten, although these were revised up several times before and during the publication of the results.

Now we also expect a very good quarter, although forecasts remain cautious. Currently, the consensus is that profits will increase by 29%. compared to the third quarter of 2020. We expect the highest profit increases in the energy, mining and industrial sectors. The smallest in the consumer goods industry, utility (supply of energy and other public goods) and the financial industry. In Europe, profit growth could be even higher and at the same time more related to GDP growth after the pandemic. The performance predictions have a large margin of possible upward movement which could help markets rebuild during this hectic period. All the more so since the valuations of many companies have fallen since the beginning of September.

The nearest future

Traditionally, JP Morgan bank starts the earnings season in the US tomorrow. The first results of companies from the Warsaw Stock Exchange will be announced on October 19. On Wednesday, we will also get to know the notes from the September meeting FOMC, perhaps they will bring more information in the context of a possible limitation of the US asset purchase program, and possibly also possible rate hikes. We will also get the US inflation data for September - which will probably remain at 5,3%. For comparison, inflation in Poland in the same period amounted to 5,8%.