S&P 500 Companies with More International Exposure Are Reporting Earnings Growth Above 20%

During the fourth quarter, the U.S. Dollar Index increased by 7.6% (to 108.49 from 100.78). Given the stronger U.S. dollar, are S&P 500 companies with more international revenue exposure reporting lower (year-over-year) earnings and revenues for Q4 compared to S&P 500 companies with more domestic revenue exposure?

The answer is no. FactSet Geographic Revenue Exposure data (based on the most recently reported fiscal year data for each company in the index) was used to answer this question. For this analysis, the index was divided into two groups: companies that generate more than 50% of sales inside the U.S. (more domestic exposure) and companies that generate more than 50% of sales outside the U.S. (more international exposure). Aggregate earnings and revenue growth rates were then calculated based on these two groups.

The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings growth rate for the S&P 500 for Q4 2024 is 16.9%. For companies that generate more than 50% of sales inside the U.S., the blended earnings growth rate is 14.4%. For companies that generate more than 50% of sales outside the U.S., the blended earnings growth rate is 20.8%.

The blended revenue growth rate for the S&P 500 for Q4 2024 is 5.2%. For companies that generate more than 50% of sales inside the U.S., the blended revenue growth rate is 5.0%. For companies that generate more than 50% of sales outside the U.S., the blended revenue growth rate is 5.9%.

What is driving the outperformance of S&P 500 companies with higher international revenue exposure?

At the sector level, the Communication Services and Information Technology sectors are the top contributors to earnings and revenue growth for S&P 500 companies with more international revenue exposure. On the other hand, the Energy and Industrials sectors are the top detractors to earnings and revenue growth for S&P 500 companies with more domestic revenue exposure.

At the company level, NVIDIA is the top contributor to earnings and revenue growth for S&P 500 companies with more international revenue exposure. On the other hand, Boeing is the top detractor to earnings and revenue growth for S&P 500 companies with more domestic revenue exposure.

However, it is interesting to note that for Q1 2025, S&P 500 companies with more international revenue exposure are projected to report lower earnings growth compared to S&P 500 companies with more domestic revenue exposure.

The estimated earnings growth rate for the S&P 500 for Q1 2025 is 8.1%. For companies that generate more than 50% of sales inside the U.S., the estimated earnings growth rate is 9.1%. For companies that generate more than 50% of sales outside the U.S., the estimated earnings growth rate is 6.6%.

The FactSet Earnings Insight report will not be published on February 21. The next edition of the report will be published on February 28.

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