For Q4 2024, 75% of $S&P 500(.SPX)$ companies beat EPS estimates and 63% exceeded revenue expectations.
97% of the S&P 500 companies have reported results, with earnings exceeding expectations by 7.5%, although this is below the 5-year average of 8.5%.
The blended earnings growth rate for Q4 2024 is 18.2%, marking the highest year-over-year earnings growth rate since Q4 2021.
Overall, the blended revenue growth rate for Q4 is 5.3%, with sectors like Financials and Health Care contributing positively to this growth. Industrials had the largest revenue decline at -2.7%.
Positive surprises were particularly noticeable in Financials (+12.6%), Information Technology (+7.5%), and Consumer Discretionary (+13.2%).
The forward 12-month P/E ratio for the S&P 500 is 21.2, above both the 5-year and 10-year averages.
How Do Sectors Perform in Q4?
Top Performing Sectors:
Financials: With a 55.9% growth rate, led by strong performances from banks like $Berkshire Hathaway(BRK.B)$ and $Goldman Sachs(GS)$ .
Communication Services: Recorded 29.6% growth, driven by $Meta Platforms, Inc.(META)$ and $Walt Disney(DIS)$.
Consumer Discretionary: Saw 27.0% growth, primarily due to $Amazon.com(AMZN)$ strong earnings.
Information Technology: The sector had 17.6% growth, fueled by $NVIDIA(NVDA)$ and $Microsoft(MSFT)$ .
Underperforming Sectors:
Energy: The only sector with a year-over-year earnings decline at -26.3% due to lower oil prices. (especially oil-related sectors like Oil & Gas Refining)
How Do Companies and Analysts Expect for Q1?
Q1 2025 Guidance: 58 companies have issued negative EPS guidance, and 40 have issued positive guidance, indicating cautious expectations for the upcoming quarter.
Materials and Consumer Discretionary saw the largest EPS estimate revisions downward for Q1 2025.
Analysts are projecting a 7.6% earnings growth rate and a 4.3% growth rate in revenue for Q1.
Conclusion
The earnings season has generally been strong, especially in the Financials, Consumer Discretionary, and Information Technology sectors. However, market caution remains due to concerns about inflation, tariffs, and potential economic slowdowns.
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