S&P 500 CY 2024 Earnings Preview: Analysts Expect Double-Digit Earnings Growth

CY 2024 Earnings Growth: 11.8%

Despite concerns about a possible recession next year, analysts expect the S&P 500 to report double-digit earnings growth in CY 2024. The estimated (year-over-year) earnings growth rate for CY 2024 is 11.8%, which is above the trailing 10-year average (annual) earnings growth rate of 8.4% (2013 – 2022). On a quarterly basis, analysts are expecting the highest earnings growth to occur in Q4 2024. For Q1 2024 through Q3 2024, analysts are projecting earnings growth of 6.8%, 10.8%, and 9.0%, respectively. For Q4 2024, analysts are projecting earnings growth of 18.2%.

All eleven sectors are predicted to report year-over-year earnings growth in CY 2024. Five of these sectors are projected to report double-digit growth led by the Health Care, Communication Services, and Information Technology sectors.

The Health Care sector is expected to report the highest (year-over-year) earnings growth rate of all eleven sectors at 19.1%. At the industry level, all five industries in this sector are projected to report a year-over-year increase in earnings. However, the Pharmaceuticals (50%) industry is the only industry predicted to report double-digit earnings growth. The Pharmaceuticals industry is also expected to be the largest contributor to earnings growth for the sector. If this industry were excluded, the estimated earnings growth rate for the Health Care sector would fall to 7.9% from 19.1%. 

The Communication Services sector is expected to report the second-highest (year-over-year) earnings growth rate of all eleven sectors at 16.9%. At the industry level, four of the five industries in the sector are projected to report a year-over-year increase in earnings. All four of these industries are projected to report double-digit earnings growth: Entertainment (48%), Wireless Telecommunication Services (39%), Interactive Media & Services (18%), and Media (13%). 

The Information Technology sector is expected to report the third-highest (year-over-year) earnings growth rate of all eleven sectors at 16.8%. At the industry level, all six industries in the sector are projected to report a year-over-year increase in earnings. Two of these six industries are expected to report double-digit earnings growth: Semiconductors & Semiconductor Equipment (34%) and Software (15%). 

CY 2024 Revenue Growth: 5.5%

Analysts also expect the S&P 500 will report single-digit revenue growth in CY 2024. The estimated (year-over-year) revenue growth rate for CY 2024 is 5.5%, which is above the trailing 10-year average (annual) revenue growth rate of 5.0% (2013 – 2022). Again, analysts expect the highest revenue growth in Q4 2024. The estimated revenue growth rates for Q1 2024 through Q4 2024 are 4.4%, 5.1%, 5.2%, and 5.7%, respectively.

All eleven sectors are projected to report year-over-year growth in revenues, led by the Information Technology (9.2%), Communication Services (7.4%), and Consumer Discretionary (7.2%) sectors. 

CY 2024 Net Profit Margin: 12.3%

The estimated net profit margin (based on aggregate estimates for revenues and earnings) for the S&P 500 for CY 2024 is 12.3%, which is above the estimated net profit margin of 11.7% for CY 2023 and above the 10-year average (annual) net profit margin of 10.6% (2013-2022). If 12.3% is the actual net profit margin for the year, it will mark the second-highest (annual) net profit margin reported by the index since FactSet began tracking this metric in 2008.

At the sector level, nine of the eleven sectors are projected to report higher net profit margins in CY 2024 relative to expectations for CY 2023, led by the Information Technology (26.0% vs. 24.3%) sector. On the other hand, the Real Estate (35.0% vs. 36.0%) sector is the only sector projected to report a lower net profit margin in CY 2024 relative to expectations for CY 2023.

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