S&P 500 Reporting Net Profit Margin Above 12% for the 2nd Time Since Q2 2022

Given continuing concerns in the market about inflation, what is the S&P 500 reporting for a net profit margin for Q2?

The (blended) net profit margin for the S&P 500 for Q2 2024 is 12.1%, which is above with the year-ago net profit margin (11.6%), above the 5-year average net profit margin (11.5%), and above the previous quarter’s net profit margin (11.8%).

In fact, this quarter marks just the second time that the S&P 500 is reporting a net profit margin above 12% since Q2 2022.

At the sector level, six sectors are reporting a year-over-year increase in their net profit margins in Q2 2024 compared to Q2 2023, led by the Financials (18.4% vs. 16.7%), Information Technology (24.9% vs. 23.3%), and Communication Services (13.4% vs. 11.9%) sectors. On the other hand, five sectors are reporting a year-over-year decrease in their net profit margins in Q2 2024 compared to Q2 2023, led by the Real Estate (35.0% vs. 36.7%) sector.

Six sectors are reporting net profit margins in Q2 2024 that are above their 5-year averages, led by the Industrials (10.7% vs. 8.2%) and Consumer Discretionary (8.7% vs. 6.6%) sectors. On the other hand, four sectors are reporting net profit margins in Q2 2024 that are below their 5-year averages, led by the Health Care (8.0% vs. 9.8%) sector.

Five sectors are reporting a quarter-over-quarter increase in their net profit margins in Q2 2024 compared to Q1 2024, led by the Materials (11.3% vs. 9.4%), Industrials (10.7% vs. 9.2%), and Health Care (8.0% vs. 6.5%) sectors. On the other hand, five sectors are reporting a quarter-over-quarter decrease net profit margins in Q2 2024 compared to Q1 2024, led by the Utilities (12.2% vs. 14.7%) sector.

It is interesting to note that analysts believe net profit margins for the S&P 500 will be above 12.0% for the rest of 2024. As of today, the estimated net profit margins for Q3 2024 and Q4 2024 are 12.4% and 12.4%, respectively.

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