Key things to watch: Q2 2024 earnings season
As Q2 2024 earnings season approaches, the S&P 500 is poised for its strongest performance in two years, with projected 8.8% earnings growth and 4.6% revenue growth.
Earnings growth to hit two-year high?
The S&P 500 is expected to report an 8.8% year-over-year (YoY) earnings growth for Quarter 2 (Q2) 2024, potentially marking the highest rate since Quarter 1 (Q1) 2022. This could be the fourth consecutive quarter of YoY earnings growth, signaling a continued recovery trend.
Key highlights
- Eight of eleven sectors are projected to report YoY growth
- Materials sector is predicted to show the largest YoY decline
- Leading sectors with double-digit growth: Communication Services, Health Care, Information Technology and Energy.
Revenue to grow 4.6%
The S&P 500 is expected to report a 4.6% YoY revenue growth, potentially marking the 15th consecutive quarter of revenue growth.
Revenue highlights
- Leading sectors in revenue growth: Information Technology and Energy
- Declining sector: Materials
Negative EPS guidance dominates
60% of S&P 500 companies have issued negative earnings per share (EPS) guidance for Q2 2024, which is above the 5-year average but below the 10-year average. Monitor any shifts in this trend as more companies report their results.
Key points
- Analysts have slightly lowered earnings estimates for Q2 2024 from 9.0% to the current 8.8% growth projection.
- Watch for further revisions as the earnings season progresses.
Future projections
- Q3 2024: Earnings growth rate forecasted at 8.2%
- 2024: Earnings growth rate forecasted at 17.6%
- Full year 2024: Expected growth at 11.3%
- 2025: Expected growth at 14.4%.
These projections may be adjusted based on Q2 results.
Double-digit growth potential
If current projections hold, 2024 and 2025 could mark the third time in 15 years that the S&P 500 reports two consecutive years of double-digit earnings growth.
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