S&P 500 Reporting Net Profit Margin Above 12% for the 4th Straight Quarter

Given continuing concerns in the market about tariffs and higher costs, what is the S&P 500 reporting for a net profit margin for Q1?

The blended net profit margin for the S&P 500 for Q1 2025 is 12.4%, which is below the previous quarter’s net profit margin, but above the year-ago net profit margin and above the 5-year average (11.7%).

In fact, this quarter marks the 4^th consecutive quarter that the S&P 500 is reporting a net profit margin above 12%. The last time the index reported four straight quarters of net profit margins above 12% was Q3 2021 through Q2 2022.

At the sector level, six sectors are reporting a year-over-year increase in their net profit margins in Q1 2025 compared to Q1 2024, led by the Communication Services (15.6% vs. 13.5%) and Health Care (8.3% vs, 6.6%) sectors. On the other hand, five sectors are reporting a year-over-year decrease in their net profit margins in Q1 2025 compared to Q1 2024, led by the Real Estate (34.6% from 36.2%) and Energy (8.0% vs. 9.4%) sectors.

Six sectors are reporting net profit margins in Q1 2025 that are above their 5-year averages, led by the Communication Services (15.6% vs. 11.9%) sector. On the other hand, five sectors are reporting net profit margins in Q1 2025 that are below their 5-year averages, led by the Materials (8.6% vs. 11.1%) sector.

Four sectors are reporting a quarter-over-quarter increase in their net profit margins in Q1 2025 compared to Q4 2024, led by the Utilities (15.0% vs. 12.7%) sector. On the other hand, seven sectors are reporting a quarter-over-quarter decrease in their net profit margins in Q1 2025 compared to Q4 2024, led by the Information Technology (25.6% vs. 26.8%) sector.

It is interesting to note that analysts believe net profit margins for the S&P 500 will be improve through the rest of 2025. As of today, the estimated net profit margins for Q2 2025 through Q4 2025 are 12.5%, 12.9%, and 13.0%, respectively.

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