S&P 500 Earnings Season Preview: Q4 2025

Heading into the start of the earnings season, both analysts and companies have been more optimistic than normal in their earnings outlooks for the fourth quarter. However, it should be noted that most of this optimism is concentrated in one sector: Information Technology. As a result, estimated earnings for the S&P 500 for the fourth quarter are higher today compared to expectations at the start of the quarter. The index is also expected to report (year-over-year) earnings growth for the 10^th straight quarter.

In terms of estimate revisions for companies in the S&P 500, analysts have increased earnings estimates for Q4 2025. On a per-share basis, estimated earnings for the fourth quarter increased by 0.5% from September 30 to December 31. In a typical quarter, analysts usually lower earnings estimates during the quarter. Over the past five years (20 quarters), earnings expectations have fallen by 1.6% on average during a quarter. Over the past ten years, (40 quarters), earnings expectations have fallen by 3.1% on average during a quarter. At the sector level, the Information Technology sector recorded the largest increase in estimated earnings of all eleven sectors during the quarter.

In terms of guidance, both the number and percentage of S&P 500 companies issuing positive EPS guidance for Q4 2025 are higher than average. At this point in time, 107 companies in the index have issued EPS guidance for Q4 2025. Of these companies, 57 have issued negative EPS guidance and 50 have issued positive EPS guidance. The number of companies issuing positive EPS guidance is above the 5-year average (44) and above the 10-year average (39). The percentage of S&P 500 companies issuing positive EPS guidance for Q4 2025 is 47% (50 out of 107), which is above the 5-year average of 42% and above the 10-year average of 40%. At the sector level, the Information Technology sector has the highest number of companies issuing positive EPS guidance for Q4 2025 of all eleven sectors.

Due to the upward revisions to earnings estimates by analysts and more positive EPS guidance issued by companies, the estimated (year-over-year) earnings growth rate for Q4 2025 is higher today relative to the start of the fourth quarter. As of today, the S&P 500 is expected to report (year-over-year) earnings growth of 8.3%, compared to the estimated (year-over-year) earnings growth rate of 7.2% on September 30.

If 8.3% is the actual growth rate for the quarter, it will mark the tenth consecutive quarter of year-over-year earnings growth for the index.

Eight of the eleven sectors are projected to report year-over-year growth, led by the Information Technology sector. On the other hand, three sectors are predicted to report a year-over-year decline in earnings, led by the Consumer Discretionary sector.

In terms of revenues, analysts also raised their estimates during the quarter. As of today, the S&P 500 is expected to report (year-over-year) revenue growth of 7.7%, compared to the expectations for revenue growth of 6.5% on September 30.

If 7.7% is the actual revenue growth rate for the quarter, it will mark the second-highest revenue growth rate reported by the index since Q3 2022 (11.0%), trailing on the previous quarter (8.4%). It will also mark the 21^st consecutive quarter of revenue growth for the index.

Ten sectors are projected to report year-over-year growth in revenues, led by the Information Technology, Communication Services, and Health Care sectors. On the other hand, the Energy sector is the only sector predicted to report a year-over-year decline in revenues.

For Q1 2026 and Q2 2026, analysts are calling for earnings growth rates of 12.6% and 14.6%, respectively. For CY 2026 analysts are projecting (year-over-year) earnings growth of 14.9%.

The forward 12-month P/E ratio is 22.2, which is above the 5-year average (20.0) and above the 10-year average (18.7). This P/E ratio is also above the forward P/E ratio of 22.0 recorded at the end of the fourth quarter (December 31).

During the upcoming week, 14 S&P 500 companies (including 2 Dow 30 components) are scheduled to report results for the fourth quarter.

This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.