Recent Performance
Total earnings for the 440 S&P 500 members that have reported Q1 results are up +5.0% from the same period last year on +4.2% higher revenues, with 78.0% beating EPS estimates and 60.9% beating revenue estimates. This growth marks a modest acceleration compared to recent quarters, with a significant jump to +11.9% when factoring in the Energy sector and Bristol Myers’s one-time charge.
Future Outlook
Projections for 2024 Q2 show S&P 500 earnings expected to rise by +9.2% from the previous year, accompanied by a +4.5% revenue increase. The estimates have been on an upward trajectory since early April, surpassing the initial forecast of +8.7% to the current pace of +9.2%. Looking ahead to the full calendar year, S&P 500 earnings are forecasted to grow by +8.9%, showing recovery post last year’s slight dip. Notably, excluding the robust Tech sector contribution, which anticipates a +15.9% increase, other sectors are expected to lift earnings by a commendable +6.3%. This revised positive trend is on display for the ongoing quarter (2024 Q2) and the full-year 2024 estimates.
Industry Trends
Encouragingly, nearly half of the 16 Zacks sectors exhibit higher aggregate earnings estimates compared to the beginning of the year. Sectors like Tech and Retail have long enjoyed positive estimate revisions, further corroborating the overall positive momentum. Of note, the Energy sector’s favorable revisions deserve special attention, hinting at an evolving earnings landscape for the ‘Magnificent 7’ stocks.
Visual Insights
The provided charts offer a visual representation of the evolving earnings estimations for different sectors and the S&P 500 index. Notably, the year-over-year earnings growth is set to rise, aided by expected margin recoveries across industries.
A sizable chunk of this year’s anticipated earnings surge is projected to stem from rebounding margins, showing a reversal of last year’s declines and a return to expanding margins. The Tech sector is expected to spearhead this margin recovery, propelling most of the anticipated gains across the board.
Conclusion
As the earnings growth landscape continues to evolve, investors are poised to benefit from the accelerating pace. With positive trends in estimates and sector performance, the market is gearing up for a promising period ahead.