Q3 Earnings Update: How Do Most S&P 500 Perform?

Capital_Insights
11-05

70% of S&P 500 companies have reported Q3 results. 103 S&P 500 companies are set to report Q3 results this week.

75% exceeded EPS estimates, slightly below the 5-year average (77%) but matching the 10-year average.

  • Earnings were reported 4.6% above estimates, below the 5-year (8.5%) and 10-year (6.8%) averages. The blended earnings growth rate rose to 5.1% (from 3.6% last week and 4.3% at Q3 end). This marks the fifth consecutive quarter of earnings growth.

    01-s&p-500-earnings-above-inline-below-estimates-q3-2024

  • 60% of companies beat revenue estimates (below the 5-year average of 69% and 10-year average of 64%). Revenue was reported 1.1% above estimates. The blended revenue growth rate for Q3 is 5.2%, up from 4.9% last week.

    02-s&P-500-revenues-above-inline-below-estimates-q3-202402-s&P-500-revenues-above-inline-below-estimates-q3-2024

How do sectors perform?

Overall, 8 out of 11 sectors showed year-over-year earnings growth, led by Communication Services and Health Care. The Energy sector saw the most significant decline.

Positive surprises came from Communication Services, Health Care, Consumer Discretionary, and Industrials, while Information Technology lagged.

03-s&p-500-earnings-growth-yoy-q3-202403-s&p-500-earnings-growth-yoy-q3-2024

Nine sectors saw year-over-year revenue growth, with IT, Health Care, and Communication Services leading, while Energy reported declines.

04-s&p-500-revenue-growth-yoy-q3-202404-s&p-500-revenue-growth-yoy-q3-2024

Outlook: Analysts forecast year-over-year earnings growth of 12.7% for Q4 2024, 13.0% for Q1 2025, and 12.2% for Q2 2025. For CY 2024 and 2025, projected growth is 9.3% and 15.1%, respectively.

The forward 12-month P/E ratio is 21.3, higher than both 5-year (19.6) and 10-year (18.1) averages but slightly below the P/E of 21.6 at the end of Q3.

Earnings Season: Which Companies Are You Following?
AI bolsters Microsoft's Q3 Azure revenue, which increased by over 30%, but a slowdown in growth is expected for Q4 along with increased AI spending. Meta's revenue slightly exceeded expectations, but AI losses worsened, with warnings of substantial future increases, and a significant rise in capital expenditures is anticipated next year. -------------- How do you view the two giants' earnings? Will you buy the dip as Microsoft dips to $400?
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  • KSR
    11-05
    KSR
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