Other companies giving strong examples of stellar earnings growth include Pepsico, which has had very good results with earnings up 20 per cent year-on-year. As restaurants and bars have reopened across the world, it has raised its guidance.
After five loss-making quarters, Delta Airlines has returned to profit, as domestic traffic has now recovered to pre-pandemic levels and government Covid aid offset some of its costs.
Fastenal, the distributor of safety and construction equipment, has also exceeded both revenue and earnings projections. It is a very cyclical business, very responsive to industrial rebound. The demand environment is strong but unsurprisingly costs are becoming a concern, especially in relation to labour and transportation.
A deceleration in the EPS growth rate is inevitable and has the potential to create negative headlines and become a source of market volatility. The current cyclical rebound cannot be sustained forever, but the current profit cycle may still have some way to go.
Karolina Noculak is investment director at Aberdeen Standard Investments
