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, signalling a continued recovery trend.
Eight of eleven sectors are projected to report YoY growth, with Communication Services, Health Care, Information Technology, and Energy leading the pack with double-digit growth. Keep an eye on the Materials sector, which is predicted to show the largest YoY decline.
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. Information Technology and Energy sectors are projected to lead in revenue growth, while Materials is the only sector expected to decline.
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.
Analysts have slightly lowered earnings estimates for Q2 2024, resulting in the current 8.8% growth projection compared to 9.0% at the start of the quarter. Watch for further revisions as the earnings season progresses.
Future projections
Analysts are forecasting earnings growth rates of 8.2% for quarter 3 (Q3) 2024 and 17.6% for quarter 4 (Q4) 2024. For the full year 2024, 11.3% growth is expected, followed by 14.4% for 2025. 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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