5 Sector ETFs to Play on Upbeat Q4 Revenue Growth

The fourth-quarter (Q4) earnings reporting cycle is in full swing. Investors have now shifted their focus from Fed and put emphasis on earnings releases. Bottom line may be investors top focus amid an earnings season, but top line probably tells you more about the inherent strength of a company.

Why to Follow Revenue Growth This Reporting Cycle?

For Q4, total earnings are expected to decline 7.2% from the same period last year on 4% higher revenues as per the Earnings Trends issued on Jan 18, 2023. Earnings growth will likely trail revenue growth in the coming two quarters. For Q1 and Q2 of 2023, earnings growths are likely to be negative 4.2% and 3.8% over revenue growth of 2.8% and 0.3%, respectively (read: 5 ETFs to Bet on Favorite Sectors of Q4 Earnings).

For Q4, four out of the Zacks classified 16 sectors of the S&P 500 will likely witness a double-digit growth in revenues. Further, investors should note that sales are harder to be influenced in an income statement than earnings. A company can land up on decent earnings numbers by adopting cost-cutting or some other measures that do not speak for its core strength. But it is harder for a company to mold its revenue figure.