- the source for market opinions


July 25, 2023 | Canadian Equity Market: High Capital Risk Amid Falling Earnings

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel ( Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog:

Canada’s TSX index has rebounded 6%, year-to-date, while its corporate earnings have contracted. As of today, the S&P/TSX Composite is expected to report a Q2 (year-over-year) earnings decline of -20.4%, compared to the estimated (year-over-year) earnings decline of -17.4% on June 30 and the estimated (year-over-year) earnings decline of -12.5% on March 31. See Canada Earnings Season Preview: Q2 2023:

If -20.4% is the actual decline for the quarter; it will mark the largest earnings decline reported by the index since Q3 2020. It will also mark the third straight quarter in which the index has reported a year-over-year decline in earnings.

…At the sector level, eight of the eleven sectors recorded a decline in estimated earnings during the quarter, led by the Materials (-11.7%), Energy (-10.2%), and Utilities (-8.7%) sectors.

…Looking ahead, analysts expect a decline in earnings of -7.9% in Q3 2023 but growth in earnings of 2.9% in Q4 2023. For all of CY 2023, analysts are predicting a decline in earnings of -9.6%.

Offering less for more: the TSX price is shown in blue below since July 2022, with one-year earnings per share estimates in black. Either earnings need to surprise to the upside over the next few quarters, or prices have more downside work to do. With cash alternatives able to earn 5% and recession odds at 100%, over-valued equities remain unattractive.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the Weekly Recap.

July 25th, 2023

Posted In: Juggling Dynamite

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site


This site uses Akismet to reduce spam. Learn how your comment data is processed.