Traders work on the ground on the Latest York Stock Exchange on Feb. 1, 2024.
Brendan McDermid | Reuters
Here’s how big of a surprise corporate profits have been this earnings season: The fourth quarter is now shaping as much as be the very best of 2023.
Despite ongoing macroeconomic concerns which have hampered demand and weighed on consumer sentiment, almost halfway into earnings season, profits are clearly coming in much better than anybody expected.
Helping firms’ bottom lines this round: easing input costs, more emphasis on cost controls and efficiencies and significantly reduced expectations.
A plethora of serious earnings beats amongst some very essential S&P 500 firms comparable to Amazon, Meta, Apple, Chevron, ExxonMobil, Merck and Bristol Myers Squibb have moved the Q4 growth rate notably higher late this week.
LSEG, formerly Refinitiv, is now seeing a virtually 8% rise in earnings growth this season. That is much better than the 4.7% expected just three weeks ago, right before the massive banks reported results.
Stronger-than-expected results from three sectors are particularly notable:
- Energy – 90% of the businesses have beat earnings estimates, with profits coming in almost 14% above expectations.
- Health care – 85% have beat on the underside line, with earnings coming in nearly 11% above expectations.
- Tech – 84% have posted earnings beats, with earnings greater than 5% above expectations.
As for the S&P 500 as a complete, Q4’s current earnings per share growth rate of seven.8% exceeds the 7.5% growth seen in all of Q3 — and is now tops for the yr.
Currently, 80% of S&P 500 earnings results have beat estimates, barely higher than normal trends, and earnings have are available in greater than 6% above expectations — not quite the 7% to eight% upside seen within the previous two quarters, but still a really strong number.
One very essential caveat: These strong figures come after earnings expectations tumbled going into the reporting season. Back on Oct. 1, S&P 500 fourth-quarter earnings were expected to grow 11% yr over yr, in line with LSEG.
Although the earnings picture has significantly improved for the reason that start of 2024, results are still far below what Wall Street had hoped for a mere 4 months ago.
Pretty much as good as fourth-quarter results have been, there’s still no positive momentum looking forward. Each first-quarter and full-year 2024 earnings estimates have come down since Jan. 1 as many firms have issued cautious guidance this earnings season.
— Charts by CNBC’s Gabriel Cortes.
Don’t miss these stories from CNBC PRO:
