Analysts expect the S&P 500 to report double-digit earnings growth in CY 2025. The estimated (year-over-year) earnings growth rate for CY 2025 is 14.8%, which is above the trailing 10-year average (annual) earnings growth rate of 8.0% (2014 – 2023).
It is interesting to note that analysts believe earnings growth for companies outside the “Magnificent 7” will improve significantly in 2025. While analysts expect the “Magnificent 7” companies to report earnings growth of 21% in 2025, they expect the other 493 companies to report earnings growth of 13% for 2025. This 13% earnings growth for CY 2025 reflects a substantial improvement to analyst expectations of just over 4% earnings growth for these same companies for CY 2024.
All eleven sectors are predicted to report year-over-year earnings growth in CY 2025. Six of these sectors are projected to report double-digit growth: Information Technology, Health Care, Industrials, Materials, Communication Services, and Consumer Discretionary. Two other sectors (Financials and Utilities) are projected to report year-over-year earnings growth of 9.0%.
In terms of revenues, the estimated (year-over-year) revenue growth rate for CY 2025 is 5.8%, which is above the trailing 10-year average (annual) revenue growth rate of 5.1% (2014 – 2023). Ten of the eleven sectors are projected to report year-over-year growth in revenues, led by the Information Technology sector. On the other hand, the Energy sector is the only sector expected to report a year-over-year decline in earnings.
The estimated net profit margin (based on aggregate estimates for revenues and earnings) for the S&P 500 for 2025 is 13.0%, which is above the 10-year average (annual) net profit margin of 10.8%. If 13.0% is the actual net profit margin for the year, it will mark the highest annual net profit margin reported by the index since FactSet began tracking this metric in 2008. The current record is 12.6%, which occurred in CY 2021.
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