S&P 500 Earnings: Will the 'Upside Surprise' Factor Continue in 2024?

The quarterly “bump” in forward 4-quarter EPS occurred this week, as the months rolled from March to April ’24.

More on that in a minute.

Some other S&P 500 EPS stats that might be of interest to readers:

• Q4 ’23 EPS ended the quarter at $57.16 on 3/31/24, up from $54.69 on 12/31/23;
• The final 2023 calendar S&P 500 EPS ended at $222.94 versus the expected $219.67 on 12/31/23;
• S&P 500 EPS rose 1% in 2023;
• The current S&P 500 EPS estimate for 2024 is $243.03 with an expected 9% – 10% growth rate this calendar year;
• The Q1 ’24 S&P 500 EPS estimate for Q1 ’24 is currently $54.95;
• Q1 ’24 expected EPS and revenue growth is 5% and 3% respectively;
• The first “2026 S&P 500 EPS” figure was published by LSEG with this week’s missive: the estimate is $300.03 as of 4/5/24;
• That number will likely come down in 2024. (Thought readers would get a kick out of it.)
• Here are the expected full-year S&P 500 estimates for 2024, 2025, and 2026 (as of this weekend’s report):
• 2024: $243.03
• 2025: $276.22
• 2026: $300.03

Here’s the Usual S&P 500 Data:

• The forward 4-quarter estimate (FFQE) jumped this week to $251.58 from last week’s $242.94, which is the usual quarterly “bump” or roll;
• The PE on the forward estimate is now 20.6x versus last week’s 21.6x;
• The “earnings yield” on the S&P 500 ended this week at 4.84% vs last week’s 4.62% the prior week, all of the boost in earnings yield from the increase in the FFQE;
• The S&P 500 finished down 1% this past week, despite Friday’s rally, after the S&P 500 closed last week at 5,254.35.

Here’s the “upside surprise” for S&P 500 earnings the last 4 quarters in 2023:

• Q4 ’23: 6.3%
• Q3 ’23: 7.2%
• Q2 ’23:7.9%
• Q1 ’23: 6.8%

A 5% upside surprise for 2024 is probably not out of reach, given how strong the economy is, with Q4 ’23 GDP printing a final of 3.4% real growth, but rather than guess, let’s watch the numbers.

Silicon Valley Bank blew up in Q1 ’23, so how did the financial sector perform in terms of EPS and revenue growth in early ’23 (?):

• Q1 ’23: 7.7% EPS growth on 10% revenue growth;
• Q2 ’23: 9.3% EPS growth on 11.1% revenue growth;
• Q1 ’24 (expected): EPS growth of 4.1% on 2.7% revenue growth;

The big banks report their Q1 ’24 next Friday, April 12th. This blog will be out with more on banks and financials this weekend or early next week.

Conclusion:

The only interest this blog has in Friday, April 12th’s earnings releases are JPMorgan (JPM) and Citigroup (C). In Q1 ’24, JPMorgan and Citi rose 18% and 24% respectively to start the year, which isn’t too shabby. Banks and financials usually outperform when you have a year where capital market returns are robust. Bond returns aren’t really cooperating so far in ’24 but corporate high-yield and high-grade bond issuance was robust in Q1 ’24 (record issuance from what I read, but I can’t recall the source) which will help names like Goldman Sachs (GS) and even Morgan Stanley (MS) who still have banking franchises, albeit smaller departments after 2008.

More to come this week, with individual previews.

None of this is advice or a recommendation. Past performance is no guarantee of future results. Investing can involve loss of principal, even for short periods of time. All S&P 500 EPS and revenue data is sourced from the London Stock Exchange Group or formerly Refinitiv. Readers should be sensitive to their own comfort level with portfolio or market volatility and adjust accordingly.

Thanks for reading.