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Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
Q4 earnings for the S&P 500 index are currently expected to be down -0.4% from the year-earlier level on +2.2% higher revenues, which would follow the +3.8% earnings growth in 2023 Q3 on +2.0% higher revenues.
Earnings estimates for Q4 came down in October and part of November but notably stabilized afterward. That said, the magnitude of declines to aggregate 2023 Q4 estimates exceeds what we saw in the first three quarters of the year.
Q4 earnings are expected to be above the year-earlier level for half of the 16 Zacks sectors, with the Technology, Retail, Consumer Discretionary, and Utilities sectors enjoying robust year-over-year earnings growth.
For the 21 S&P 500 members that have reported results for their fiscal quarters ending in November (counted as part of the Q4 tally), total earnings are up +9.0% from the same period last year on +4.8% higher revenues, with 90.5% beating EPS estimates and 52.4% beating revenue estimates.
For 2023 Q4, total S&P 500 earnings are currently expected to be -0.4% below the year-earlier period on +2.2% higher revenues. This would follow the +3.8% increase in index earnings in 2023 Q3 on +2.0% higher revenues.
Earnings estimates for Q4 have been steadily coming down since the quarter got underway, as the chart below shows.
Image Source: Zacks Investment Research
This is a bigger decline in quarterly estimates compared to what we had seen in the comparable periods for the preceding two quarters, a reversal of the favorable revisions trend we have spotlighted in this space since April 2023.
We should point out here that the pressure on Q4 estimates was the greatest in October and part of November, appearing to ease after that. That said, the pressure on Q4 estimates was broad-based, with estimates for 11 of the 16 Zacks getting cut since the start of the period. The biggest cuts to estimates have been for the Transportation, Construction, Conglomerates, Consumer Discretionary, Technology, and Medical sectors.
On the positive side, Q4 estimates have been raised since the quarter got underway for five sectors, with the most significant upward adjustments to estimates for the Utilities, Industrial Products, Autos, Finance, and Energy sectors.
The Finance sector, which will dominate the first phase of the Q4 reporting cycle, has enjoyed a modest upgrade to earnings estimates. You can see this in the Q4 revisions trend for sector players like JPMorgan (JPM - Free Report) , Progressive (PGR - Free Report) , and others.
As with 2023 Q4 estimates, full-year 2024 estimates also came under pressure as the last quarter of the year got underway. But the pressure started easing in November, and the stabilizing trend continued in December. You can see these evolving trends in the chart below, which shows the aggregate earnings estimates for the S&P 500 index since mid-May 2024.
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture on a quarterly basis.
Image Source: Zacks Investment Research
As you can see from these quarterly earnings-growth expectations, the growth picture is expected to steadily improve over the next few quarters.
Below, we show the overall earnings picture for the S&P 500 index on an annual basis.
Image Source: Zacks Investment Research
Given the expected moderation in the U.S. economy’s growth trajectory due to the cumulative effects of Fed tightening, these estimates likely need to come down. Some of that downward adjustment is already happening, as we showed earlier. In any case, there is no recession in this outlook.
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Q4 Earnings Season Gets Underway
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
For 2023 Q4, total S&P 500 earnings are currently expected to be -0.4% below the year-earlier period on +2.2% higher revenues. This would follow the +3.8% increase in index earnings in 2023 Q3 on +2.0% higher revenues.
Earnings estimates for Q4 have been steadily coming down since the quarter got underway, as the chart below shows.
Image Source: Zacks Investment Research
This is a bigger decline in quarterly estimates compared to what we had seen in the comparable periods for the preceding two quarters, a reversal of the favorable revisions trend we have spotlighted in this space since April 2023.
We should point out here that the pressure on Q4 estimates was the greatest in October and part of November, appearing to ease after that. That said, the pressure on Q4 estimates was broad-based, with estimates for 11 of the 16 Zacks getting cut since the start of the period. The biggest cuts to estimates have been for the Transportation, Construction, Conglomerates, Consumer Discretionary, Technology, and Medical sectors.
On the positive side, Q4 estimates have been raised since the quarter got underway for five sectors, with the most significant upward adjustments to estimates for the Utilities, Industrial Products, Autos, Finance, and Energy sectors.
The Finance sector, which will dominate the first phase of the Q4 reporting cycle, has enjoyed a modest upgrade to earnings estimates. You can see this in the Q4 revisions trend for sector players like JPMorgan (JPM - Free Report) , Progressive (PGR - Free Report) , and others.
As with 2023 Q4 estimates, full-year 2024 estimates also came under pressure as the last quarter of the year got underway. But the pressure started easing in November, and the stabilizing trend continued in December. You can see these evolving trends in the chart below, which shows the aggregate earnings estimates for the S&P 500 index since mid-May 2024.
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture on a quarterly basis.
Image Source: Zacks Investment Research
As you can see from these quarterly earnings-growth expectations, the growth picture is expected to steadily improve over the next few quarters.
Below, we show the overall earnings picture for the S&P 500 index on an annual basis.
Image Source: Zacks Investment Research
Given the expected moderation in the U.S. economy’s growth trajectory due to the cumulative effects of Fed tightening, these estimates likely need to come down. Some of that downward adjustment is already happening, as we showed earlier. In any case, there is no recession in this outlook.