S&P 500 Reporting Double-Digit Earnings Growth for 5th Straight Quarter

During the past week, the (blended) earnings growth rate for the S&P 500 for the fourth quarter increased to 11.9% from 8.2%. If 11.9% is the actual growth rate for the quarter, it will mark the 5th straight quarter that the index has reported double-digit (year-over-year) earnings growth. The last time the S&P 500 reported 5 consecutive quarters of double-digit earnings growth was Q4 2017 through Q4 2018. At the sector level, three sectors are reporting double-digit earnings growth for the quarter: Information Technology, Industrials, and Communication Services.

However, the Q4 earnings growth rate for the S&P 500 has been increasing over a longer timeframe. On September 30, the estimated earnings growth rate for Q4 was 7.2%. On December 31, the estimated earnings growth rate for Q4 was 8.3%. Today, the blended earnings growth rate is 11.9%.

Which sectors and companies have been the largest contributors to the increase in the Q4 earnings growth rate for the S&P 500 since December 31? At the sector level, the Industrials, Information Technology, and Communication Services sectors have been the largest contributors to the increase in the Q4 earnings growth rate over this period.

In the Industrials sector, the positive EPS surprises reported by Boeing ($9.92 vs. -$0.44) and GE Vernova ($13.48 vs. $2.93) have been the largest contributors to the increase in the earnings growth rate for the index since December 31. It should be noted that the actual EPS for Boeing included a $9.6 billion dollar gain on a sale connected with closing of the Digital Aviation Solutions transaction, while the actual EPS for GE Vernova included a $2.9 billion tax benefit due to a U.S. valuation allowance release. As a result, the blended earnings growth rate for the Industrials sector has increased to 25.6% from -0.3% over this period.

In the Information Technology sector, the positive EPS surprises reported by Apple ($2.84 vs. $2.67) and Microsoft ($4.14 vs. $3.91) have been significant contributors to the increase in the earnings growth rate for the index since December 31. As a result, the blended earnings growth rate for the Information Technology sector has increased to 29.8% from 25.8% over this period.

In the Communication Services sector, the positive EPS surprise reported by Meta Platforms ($8.88 vs. $8.21) has been a substantial contributor to the increase in the earnings growth rate for the index since December 31. As a result, the blended earnings growth rate for the Communication Services sector has increased to 10.2% from 6.2% over this period.

It is interesting to note that analysts believe the S&P 500 will continue to report double-digit earnings growth over the next four quarters. For Q1 2026 through Q4 2026, the estimated (year-over-year) earnings growth rates for the S&P 500 are 11.7%, 14.9%, 15.2%, and 15.4%, respectively.

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.