The first quarter of 2022 has come to an end; as of March 31, 2022, S&P Capital IQ consensus estimates project S&P 500 Q1 EPS to have grown 5.1% on a year-over-year (Y/Y) basis, notes Sam Stovall, chief investment strategist for CFRA Research in the firm's flagship newsletter, The Outlook.

This forecasted increase is only a fraction of last year’s advance, however, due to tougher Y/Y comparisons from the post-pandemic surge in 2021, mounting macro headwinds emanating from the jump in oil prices and swiftly rising inflation readings and interest rates, and heightened geopolitical tensions that have compounded the global supply chain disruption.

Yet, encouragingly, all sizes, styles, and 8 of 11 sectors are projected to record Y/Y increases in Q1 operating results, with mid and small caps outpacing large caps, and growth stocks exceeding value stocks.

Specifically, Q1 EPS should be led by energy, industrials, and materials, while declines are expected for the communication services, consumer discretionary, and financials groups. Q1 gains are also projected for 61% of the S&P 500’s sub-industries. S&P 500 EPS are forecast to rise 7.7% for all of 2022, following a large 47.0% gain in 2021.

The S&P 500 growth group is expected to post a 9.7% increase in Q1 and advance 9.7% for the full year. The value group should record a Q1 gain of a mere 0.2% but rise 4.7% for all of 2022. The S&P MidCap 400’s EPS are projected to advance 15.9% in Q1 and 10.1% in 2022 while the S&P SmallCap 600 climbs 17.0% in Q1 and 8.4% for the year.

Overseas, the S&P Developed ex-U.S. BMI’s EPS are expected to climb 7.2% in 2022, while the S&P Emerging BMI should see a 5.4% increase. Quarter-ending valuations remain elevated, however, as the S&P 500’s P/E on next-12-months’ EPS is now 20.5x, or 21% above its average since 2000.

Representative stocks from the S&P 500 sub-industries with the greatest Q1 EPS gains are as follows: Boston Beer (SAM), Exxon Mobil (XOM), Diamondback Energy (FANG), Sysco Corp. (SYY), Cleveland-Cliffs (CLF), Vornado Realty Trust (VNO), Schlumberger (SLB), and Corteva (CTVA).

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