S&P 500 Earnings Season Update: April 19, 2024 (2024)

At this early stage, the first quarter earnings season for the S&P 500 is off to a mixed start. On the positive side, both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are at or above their 10-year averages. On the negative side, substantial downward revisions to EPS estimates for two companies in the Health Care sector have caused a decline in the earnings growth rate over the past two weeks. As a result, the index is reporting lower earnings for the first quarter today relative to the end of last week and relative to the end of the quarter. However, the index is still reporting (year-over-year) earnings growth for the third-straight quarter.

Overall, 14% of the companies in the S&P 500 have reported actual results for Q1 2024 to date. Of these companies, 74% have reported actual EPS above estimates, which is below the 5-year average of 77% but equal to the 10-year average of 74%. In aggregate, companies are reporting earnings that are 7.8% above estimates, which is below the 5-year average of 8.5% but above the 10-year average of 6.7%. Historical averages reflect actual results from all 500 companies, not the actual results from the percentage of companies that have reported through this point in time.

During the past week, downward revisions to EPS estimates for a company in the Health Care sector, partially offset by positive earnings surprises reported by companies in the Financials sector, were the largest contributor to the decrease in the overall growth rate for the index over this period. Since March 31, downward revisions to EPS estimates for two companies in the Health Care sector, partially offset by positive earnings surprises reported by companies in the Financials sector, have been the largest contributor to the decrease in the earnings growth rate for the index during this period.

As a result, the index is reporting lower earnings for the first quarter today relative to the end of last week and relative to the end of the quarter. The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings growth rate for the first quarter is 0.5% today, compared to an earnings growth rate of 0.9% last week and an earnings growth rate of 3.4% at the end of the first quarter (March 31).

If 0.5% is the actual growth rate for the quarter, it will mark the third consecutive quarter of year-over-year earnings growth for the index.

Six of the eleven sectors are reporting (or are projected to report) year-over-year earnings growth, led by the Utilities, Information Technology, Communication Services, and Consumer Discretionary sectors. On the other hand, five sectors are reporting a year-over-year decline in earnings, led by the Health Care, Materials, and Energy sectors.

In terms of revenues, 58% of S&P 500 companies have reported actual revenues above estimates, which is below the 5-year average of 69% and below the 10-year average of 64%. In aggregate, companies are reporting revenues that are 1.0% above the estimates, which is also below the 5-year average of 2.0% and below the 10-year average of 1.4%. Again, historical averages reflect actual results from all 500 companies, not the actual results from the percentage of companies that have reported through this point in time.

During the past week, positive revenue surprises reported by companies in the Financials sector were mainly responsible for the slight increase in the overall growth rate for the index over this period. Since March 31, positive revenue surprises reported by companies in the Financials sector have been offset by downward revisions to revenue estimates for companies in the Energy, Consumer Discretionary, and Industrials sectors, resulting in no change to the revenue growth rate during this period.

As a result, the index is reporting slightly higher revenues for the first quarter today relative to the end of last week, but flat revenues relative to the end of the quarter. The blended revenue growth rate for the first quarter is 3.5% today, compared to a revenue growth rate of 3.4% last week and a revenue growth rate of 3.5% at the end of the first quarter (March 31).

If 3.5% is the actual revenue growth rate for the quarter, it will mark the 14^th consecutive quarter of revenue growth for the index.

Eight sectors are reporting year-over-year growth in revenues, led by the Communication Services and Information Technology sectors. On the other hand, three sectors are reporting (or are predicted to report) a year-over-year decline in revenues, led by the Materials and Energy sectors.

Looking ahead, analysts expect (year-over-year) earnings growth rates of 9.6%, 8.7%, and 17.7% for Q2 2024, Q3 2024, and Q4 2024, respectively. For CY 2024, analysts are calling for (year-over-year) earnings growth of 10.7%.

The forward 12-month P/E ratio is 19.9, which is above the 5-year average (19.1) and above the 10-year average (17.8). However, it is below the forward P/E ratio of 21.0 recorded at the end of the first quarter (March 31).

During the upcoming week, 158 S&P 500 companies (including 11 Dow 30 components) are scheduled to report results for the first quarter.

Q1 2024: Scorecard

Q1 2024: Growth

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