Aug 9, 2021 - Economy

Earnings estimates have recovered to pre-pandemic levels

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

In 2019, Wall Street’s forecasters had high hopes for 2021 earnings. But when the pandemic hit, those expectations collapsed. The recovery has now brought expectations back to pre-pandemic levels.

Why it matters: Expected earnings are the key driver of stock prices in the long run.

By the numbers: Back in August 2019, analysts estimated that S&P 500 earnings per share would rise to $198 in 2021, according to FactSet.

  • They revised those estimates down to a low of about $161 in June 2020.
  • As of Aug. 5, that estimate returned to $198.08.

The big picture: Unfortunately, it’s incredibly difficult to accurately predict the future. Even when they’re looking six months out, Wall Street’s professional forecasters are often off target.

The bottom line: There’s a reason better-than-expected earnings are called an earnings "surprise."

Go deeper