EPS Beats and Misses %
In Q1 2024, 78% of S&P 500 constituents surpassed EPS expectations vs. S&P Capital IQ Estimates, a 4% increase compared to Q4 2023 (74%), 2% decrease compared to Q3 2023 (80%), 1% decrease compared to Q2 2023 (79%) and a 1% increase compared to Q1 2023 (77%). The increase this quarter could be attributed to a couple factors, including the success of companies focusing on Generative AI, cooling inflationary pressure and strengthening U.S. PMI™️. The 78% of constituents beating street estimates is right on par with the last four quarter average, and we haven’t seen this number dip below 70%, since Q4 2022 (68%).
At the individual sector level, Information Technology once again had the highest percentage of firms outperforming EPS estimates with 87%, though this number has trended down over the last few quarters, with 88% surpassing in Q4 2023, and 89% surpassing in Q3 2023. Following Information Technology was Healthcare, with 86% of constituents outperforming, a sharp increase from last quarter’s number of 78%, and above their last four quarter average of 83%. Right behind Healthcare were Industrials and Consumer Staples, with 85% and 84% of firms outperforming EPS expectations.
This quarter, Energy had the lowest percentage of firms surpassing EPS estimates with 59%, a steep decline from last quarter’s percentage of 70%, and well below the last four quarter average (also 70%). After Energy, Real Estate was the next lowest sector with 65%, although this was a drastic improvement from Q4 and Q3 2023’s percentage of 52%, signaling a potential rebound for constituents in the sector for the rest of the year. Slightly above Real Estate was Communication Services with 68%, another sector with a drastic improvement from its Q4 2024 percentage of 56%.
EPS Growth % (Q1 2023 vs. Q1 2024)
Year-over-year, the S&P 500 recorded an EPS growth rate of 17.2%, decreasing from 18.9% in Q4 2023, but still above Q3 2023 (13.9%), and well above Q2 and Q1 2023 at 4.3% and 2.6%, respectively. The strong performance year-over-year between Q1 2023 and Q1 2024 highlights the continued improvement in market conditions.
This quarter we also saw fewer sectors recording negative EPS growth. The only two were, Energy with -25.0% and Materials with -7.7%. Last quarter Healthcare was slightly negative at -0.3% but rebounded back into positive territory this quarter with 3.3% growth, something the sector didn’t achieve all last year.
The highest performing sector of the quarter once again was Communication Services with 73.6%, though this number did fall quite a bit from Q4 2023’s 96.3%. Communication Services was driven primarily by two constituents that won’t surprise you, Meta Platforms, Inc. (NasdaqGS:META) with 4.7 in Q1 2024 vs. 2.2 in Q1 2023, and Alphabet Inc. (NasdaqGS:GOOGL) with 1.9 in Q1 2024 vs. 1.2 in Q1 2023.
After Communication Services, Consumer Discretionary was the next highest growth sector with 30.0%, followed by Financials with 22.0%, and Utilities with 19.4%. Information Technology and Real Estate both recorded double- digit EPS growth year-over-year with 17.3% and 12.4%, respectively. Consumer Staples and Industrials both recorded single digit EPS growth year-over-year.
Revenue Beats and Misses %
In Q1 2024, 59% of S&P constituents outperformed Revenue expectations vs. S&P Capital IQ Estimates, a 7% decrease compared to Q4 2023 (66%), 4% decrease compared to Q3 2023 (63%), and 5% below Q2 2023 (64%). This quarter was the lowest recorded percentage for the index and the first time it’s dipped below 60% in the last six quarters.
The sector with the highest percentage of firms surpassing revenue estimates was Real Estate at 71%, a 3% increase from its Q4 and Q3 2023 percentage of 68%. This was a stronger quarter overall for Real Estate, which saw an increase in percentages for both EPS and Revenue this quarter. After Real Estate, Healthcare was the next highest sector with 69%, but this was a steep decline from last quarter’s percentage of 86%. Closely behind Healthcare were Information Technology and Financials with 67% and 66% of firms surpassing revenue estimates, respectively.
Utilities once again had the weakest showing of the individual sectors, with only 17% of firms outperforming estimates, as it fell even further from 30% in Q4 2023. After Utilities, Materials and Communication Services were the next lowest sectors with 47% and 46%, respectively. Both of which had meaningful declines from Q4 2023, when Materials recorded 61% and Communication Services recorded 79%. Following Materials were Energy with 52%, Industrials with 56% and Consumer Staples with 57%.
YoY Revenue Growth % (Q1 2023 vs. Q1 2024)
Overall, Q1 2024 revenue for the S&P 500 recorded a growth rate of 10.9%, year-over-year, an increase from 9.3% last quarter, 5.9% in Q3 2023, and 3.9% in Q2 and Q1. Communication Services was once again the highest revenue growth sector, increasing 15.7% (Q1 2024 vs. Q1 2023), up a bit from the Q4 2023 growth rate of 13.6%, and a boost from Q3 2023’s growth rate of 11.2%. After Communication Services, Information Technology was the next highest revenue growth sector with 14.8%, an increase from 10.3% last quarter. Following up Information Technology was Consumer Discretionary with 10.4% revenue growth, although this was a decline from 11.8% in Q3 2023.
This quarter, we observed negative year-over-year growth from three sectors, Utilities with -9.9%, Energy with -3.9% and Materials with -1.5%. All three recorded negative growth last quarter, but Energy was the only one with negative growth slowing from the previous quarter (-12.9% in Q4 2023), while Materials and Utilities fell even further. The other sectors all recorded single digit revenue growth year-over-year, Real Estate with 7.6%, Financials with 6.4%, Healthcare with 5.8%, Consumer Staples with 5.0% and Industrials with 3.5%.
Source: S&P Capital IQ Pro. Data as of July 12, 2024.