Earnings Forward Momentum

Emphasizing the Positive:

Total earnings for the 440 S&P 500 members that have reported Q1 results are up +5.0% from the same period last year on +4.2% higher revenues, with 78.0% beating EPS estimates and 60.9% beating revenue estimates.

Envisioning a brighter future, the earnings and revenue growth pace for these 440 index members marks a modest acceleration from preceding periods. The +5% earnings growth rate surges to +11.9% after accounting for the Energy sector and Bristol Myers’s extraordinary charge.

Anticipating the next act, S&P 500 earnings for 2024 Q2 are projected to rise +9.2% year-over-year, with estimates on an upward trajectory since the start of April, reflecting a robust +9.2% earnings growth pace – up from +8.7% at the beginning of the month.

Projecting ahead, the calendar year outlook suggests S&P 500 earnings are set to grow by +8.9% in 2024, rebounding from last year’s slight decline. Isolating the Tech sector’s stellar +15.9% earnings surge in 2024, the rest of the index is still poised for a notable +6.3% rise.

Spotting a positive trend in recent weeks with estimates on the rise for 2024 Q2 and full-year 2024, a beacon of hope shines forth. Sectors like Tech and Retail showing early optimism, with half of the 16 Zacks sectors seeing higher aggregate earnings estimates compared to the start of the year.

Delving into the details, the Energy sector’s favorable revisions’ narrative deserves a spotlight. As we delve deeper into this week’s discussion, the forefront is held by the ‘Magnificent 7’ stocks.

The charts below are windows into the future, revealing the potential earnings landscape for the group:

Image Source: Zacks Investment Research

Witness the optimism as the group’s expected earnings in 2024 are on an upward trajectory, reaching $443.9 billion, up from $438.1 billion merely a week ago and $428.2 billion the week prior.

While the storyline for Tesla and Apple remains clouded with negative revisions, a silver lining emerges with the other five members showing positive trends. Of these, Nvidia stands out as a standout star.

Image Source: Zacks Investment Research

Predicting the Journey:

Traveling back in time, peer into the past year’s evolution of sector-wide earnings to gauge the sector’s trajectory:

Image Source: Zacks Investment Research

Foretelling the collective path, observe how S&P 500 aggregate earnings for full-year 2024 have evolved:

Image Source: Zacks Investment Research

Dive further into the overall earnings narrative for the S&P 500 index, peering through the lens of annual figures:

Image Source: Zacks Investment Research

Envisioning the year’s growth, a significant portion of earnings is anticipated to stem from margins recovering from the previous year’s declines and beginning to expand anew. The focal point lies in expectations for aggregate net margins to return to 2022 levels, with the Tech sector steering the advancement.