A new season of quarterly corporate earnings reports is approaching in the U.S., and sentiment remains upbeat. Consensus estimates point to 20% earnings growth for S&P 500 companies in the first quarter of 2021 (see attached table), which would make this the period with the highest earnings growth since the third quarter of 2018, when earnings grew by 26.1%. For the second quarter, given the low base of comparison, an even greater increase in earnings for these companies is expected (+50%).

Revenue is expected to remain strong, with growth of 5% projected for Q1 2021 and 18% for Q2 2021.

For the full year, earnings growth of 23% and sales growth of 10% are expected, although we believe there is an upside risk to the market consensus, given that, based on the IMF’s latest update to its 2021 global GDP growth projections of 6%, this would be consistent with earnings growth of 34% for the S&P 500.