Data Story
2022 has been one highlighted by fear, volatility, and more fear.
Despite much of the rhetoric, the companies that make up the market continue to perform fundamentally well in aggregate. As of today, sales expectations for 2022 are expected to reach +10%. Some would suggest this is inflation induced, however one should also account for the revenue percent loss stemming from currency. Nearly 50% of S&P revenue comes from international, therefore a meaningful impact on headline revenue figures. More on that in a minute.
When looking at sector by sector, all sectors are expected to see positive revenue growth in 2022.
Current expectations are for another increase in sales in 2023 and mid-single-digit earnings growth. Will that come true? Only time will tell, but all the figures presented so far suggest 2022 was more around fear than reality.
Potential Investment Implications
One thing that long-term investors can do is focus on the progress (or lack of) your portfolio companies are making. Ultimately, we invest in companies, not stocks, and as history has proven, a stock eventually reflects the fundamental value of the underlying asset.
Now 2023 will be interesting from the standpoint of currency. All that currency loss throughout 2022 will possibly come back to revenues, and in many cases currency was a negative 3-7% revenue headwind. If deflationary forces continue, the continuation of a healthy consumer, the currency becomes a tailwind, 2023 could surprise.
Disclaimer: See the disclaimer page. Not a recommendation to purchase or sell any securities mentioned.