S&P 500 Earnings Season Update: January 17, 2025

At this early stage, the fourth quarter earnings season for the S&P 500 is off to a strong start. Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above recent averages. As a result, the index is reporting higher earnings for the fourth quarter today relative to the end of last week and relative to the end of the quarter. In addition, the index is reporting its highest year-over-year earnings growth rate for Q4 2024 in three years.

Overall, 9% of the companies in the S&P 500 have reported actual results for Q4 2024 to date. Of these companies, 79% have reported actual EPS above estimates, which is above the 5-year average of 77% and above the 10-year average of 75%. In aggregate, companies are reporting earnings that are 9.1% above estimates, which is above the 5-year average of 8.5% and above the 10-year average of 6.7%. Historical averages reflect actual results from all 500 companies, not the actual results from the percentage of companies that have reported through this point in time.

During the past week, positive EPS surprises reported by companies in the Financials sector were the largest contributors to the increase in the overall earnings growth rate for the index over this period. Since December 31, positive EPS surprises reported by companies in the Financials sector, partially offset by downward revisions to EPS estimates for companies in the Energy sector, have been the largest contributors to the increase in the overall earnings growth rate for the index over this period.

As a result, the index is reporting higher earnings for the fourth quarter today relative to the end of last week and relative to the end of the quarter. 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 fourth quarter is 12.5% today, compared to an earnings growth rate of 11.5% last week and an earnings growth rate of 11.9% at the end of the fourth quarter (December 31).

If 12.5% is the actual growth rate for the quarter, it will mark the highest year-over-year earnings growth rate reported by the index since Q4 2021 (31.4%). It will also mark the sixth consecutive quarter of year-over-year earnings growth for the index.

Seven of the eleven sectors are reporting (or are projected to report) year-over-year growth. Six of these seven sectors are reporting (or are predicted to report) double-digit growth: Financials, Communication Services, Information Technology, Consumer Discretionary, Utilities, and Health Care. On the other hand, four sectors are reporting (or are predicted to report) a year-over-year decline in earnings. Only one of these four sectors is reporting a double-digit decline: Energy.

In terms of revenues, 67% of S&P 500 companies have reported actual revenues above estimates, which is below the 5-year average of 69% but above the 10-year average of 64%. In aggregate, companies are reporting revenues that are 1.3% above the estimates, which is below the 5-year average of 2.1% and below the 10-year average of 1.4%. Again, historical averages reflect actual results from all 500 companies, not the actual results from the percentage of companies that have reported through this point in time.

Since December 31, positive revenue surprises reported by companies in the Financials sector have been the largest contributors to the slight increase in the overall revenue growth rate for the index over this period.

As a result, the blended revenue growth rate for the fourth quarter is 4.7% today, compared to a revenue growth rate of 4.7% last week and a revenue growth rate of 4.6% at the end of the fourth quarter (December 31).

If 4.7% is the actual revenue growth rate for the quarter, it will mark the 17^th consecutive quarter of revenue growth for the index.

Eight sectors are reporting (or are projected to report) year-over-year growth in revenue, led by the Information Technology sector. On the other hand, three sectors are reporting (or are predicted to report) a year-over-year decline in revenue, led by the Energy sector.

Looking ahead, analysts expect (year-over-year) earnings growth rates of 11.6 and 11.6% for Q1 2025 and Q2 2025, respectively. For CY 2025, analysts are predicting (year-over-year) earnings growth of 14.8%.

The forward 12-month P/E ratio is 21.6, which is above the 5-year average (19.7) and above the 10-year average (18.2). This P/E ratio is slightly above the forward P/E ratio of 21.5 recorded at the end of the fourth quarter (December 31).

During the upcoming week, 43 S&P 500 companies (including 6 Dow 30 components) are scheduled to report results for the fourth quarter.

Q4 2024: Scorecard

Q4 2024: Growth

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