S&P 500 Reporting Net Profit Margin Of At Least 12% for the 2nd Straight Quarter

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 2024 is 12.0%, which is below the previous quarter’s net profit margin of 12.2% and below the year-ago net profit margin of 12.2%, but above the 5-year average of 11.5%.

In fact, this quarter marks the 2^nd consecutive quarter that the S&P 500 is reporting a net profit margin at or above 12%. The last time the index reported two straight quarters of net profit margins of 12% or higher was Q1 2022 and Q2 2022.

At the sector level, three sectors are reporting a year-over-year increase in their net profit margins in Q3 2024 compared to Q3 2023, led by the Information Technology (24.7% vs. 23.9%) sector. On the other hand, seven sectors are reporting a year-over-year decrease in their net profit margins in Q3 2024 compared to Q3 2023, led by the Energy (8.1% vs. 10.6%) sector.

Three sectors are reporting a quarter-over-quarter increase in their net profit margins in Q3 2024 compared to Q2 2024, led by the Communication Services (13.4% vs. 11.5%) and Utilities (15.3% vs. 13.6%) sectors. On the other hand, eight sectors are reporting a quarter-over-quarter decrease in their net profit margins in Q3 2024 compared to Q2 2024, led by the Materials (9.3% vs. 11.5%) and Industrials (9.2% vs. 10.9%) sectors.

Six sectors are reporting net profit margins in Q3 2024 that are above their 5-year averages, led by the Consumer Discretionary (9.3% vs. 6.7%) sector. On the other hand, five sectors are reporting net profit margins in Q3 2024 that are below their 5-year averages, led by the Health Care (7.7% vs. 9.7%) and Materials (9.3% vs. 11.2%) sectors.

It is interesting to note that analysts believe net profit margins for the S&P 500 will be above 12.0% for the next three quarters. As of today, the estimated net profit margins for Q4 2024 through Q2 2025 are 12.1%, 12.6%, and 13.1%.

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