Q2 2024 Analysis: Key Drivers of Corporate Profit Growth

With nearly 90% of the Q2 reports already submitted, we share the key takeaways of the season:

EPS Growth:

  • Earnings Per Share (EPS) exceeded initial expectations with a year-over-year increase of +8.3%.
  • 79% of companies reported EPS above expectations, surpassing the long-term average of 75%.
  • The EPS growth for the S&P 500 was positive, even excluding the Mag-7, for the first time in five quarters, with a +4.6% year-over-year growth.

Uneven Performance:

Despite an overall solid season, some indicators fell short of expectations.

  • The proportion of companies that beat sales estimates in the U.S. dropped to 48%, well below the long-term average of over 60%. In its year-over-year variation, sales grew +5%.
  • This could put pressure on profit margins in the second half of the year.

Regional Performance:

  • U.S. companies showed better performance in terms of EPS, with an 8% year-over-year growth, compared to +1% in Europe.
  • However, the proportion of companies exceeding sales estimates in Europe (51%) was higher than in the U.S. (48%).
  • This performance aligns with fluctuations in exchange rates.

Sector Results:

  • The Materials and Consumer Staples sectors showed weaker results.
  • In contrast, Consumer Discretionary, Healthcare, Financials, and Utilities experienced double-digit EPS growth.
  • Amazon was the biggest driver of growth in the Consumer Discretionary sector; without Amazon, growth in this sector would have dropped by 6% year-over-year.

Future Perspectives:

  • Despite challenges such as high interest rates and slowing employment, the overall resilience of the economy may continue to drive corporate earnings.
  • An annual growth of 10.3% is expected for this year, slightly below the initially estimated 10.8%.
  • For the next year, earnings growth is projected to be close to 15%, which seems somewhat optimistic for a scenario of economic slowdown.

S&P 500 Earnings Growth and S&P 500 Excluding the Magnificent 7

Source: JP Morgan

Ponte en contacto con nosotros

Receive the best financial market news

Cookie Policy

We use our own and third party cookies to improve our services and show you advertising related to your preferences, by analyzing your browsing habits. By continuing, you confirm that you have read and accept this policy.