Featured Image

S&P 500 Reporting A Lower Year-Over-Year Net Profit Margin For the 7th Straight Quarter

Earnings

By John Butters  |  October 24, 2023

Given continuing concerns in the market about inflation, what is the S&P 500 reporting for a net profit margin for Q3?

The (blended) net profit margin for the S&P 500 for Q3 2023 is 11.6%, which is below the year-ago net profit margin (11.9%), equal to the previous quarter’s net profit margin (11.6%), and above the 5-year average (11.4%). If 11.6% is the actual net profit margin for the quarter, it will mark the seventh straight quarter in which the net profit margin has declined year-over-year.

At the sector level, six sectors are reporting a year-over-year increase in their net profit margins in Q3 2023 compared to Q3 2022, led by the Communication Services (12.2% vs. 9.8%) sector. On the other hand, five sectors are reporting a year-over-year decrease in their net profit margins in Q3 2023 compared to Q3 2022, led by the Energy (11.0% vs. 14.4%) and Health Care (8,1% vs. 10.5%) sectors.

Eight sectors are reporting net profit margins in Q3 2023 that are above their 5-year averages, led by the Energy (11.0% vs. 8.4%) sector. On the other hand, three sectors are reporting net profit margins in Q3 2023 that are below their 5-year averages, led by the Health Care (8.1% vs. 10.3%) sector.

Five sectors are reporting a quarter-over-quarter increase in their net profit margins in Q3 2023 compared to Q2 2023, led by the Utilities (14.2% vs. 12.2%) sector. On the other hand, five sectors are reporting a quarter-over-quarter decrease in their net profit margins in Q3 2023 compared to Q2 2023, led by the Real Estate (35.2% vs. 37.3%) and Materials (9.7% vs. 11.8%) sectors.

It is interesting to note that analysts believe net profit margins for the S&P 500 will be higher in the first half of 2024. As of today, the estimated net profit margins for Q4 2023, Q1 2024, and Q2 2024 are 11.5%, 12.0%, and 12.3%, respectively.

01-s&p-500-net-profit-margin-q3-2018-to-q3-2023

02-s&p-500-sector-level-net-profit-margins-q3-2023-versus-q3-2022

03-s&p-500-sector-level-net-profit-margins-q3-2023-versus-5-year-average

04-s&p-500-sector-level-net-profit-margins-q3-2023-versus-q2-2023

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.

Download the latest Earnings Insight

John Butters

Vice President, Senior Earnings Analyst

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His weekly research report, “Earnings Insight,” provides analysis and commentary on trends in corporate earnings data for the S&P 500 including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).

Comments

The information contained in this article is not 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.