In the third quarter of 2024, S&P 500 companies outperformed earnings estimates, with 75 percent of the firms surpassing analysts' expectations. While the 75 percent figure in-line with the 10-year average, it slightly lags the 5-year average of 77 percent.
The S&P 500 follows a January to December financial year.
Among the sectors, the Communication Services sector, which includes names such as Meta Platforms and Alphabet Inc., led the pack, with 92 percent of its 22 constituents reporting earnings above estimates. This was then followed closely by the Consumer Staples sector, that saw 87 percent of its companies record profits above estimates.
The Healthcare and IT pack also showed strong results, with 85 percent and 81 percent of companies, respectively, beating earnings forecasts.
However, on the other hand, sectors such as Materials, Real Estate and Consumer Discretionary lagged the pack faced challenges, with under 70 percent of the companies topping earnings expectations.
On the revenue front, it was a different picture entirely. Compared to 75 percent of the companies exceeding earnings estimates, only 60 percent of the S&P 500 companies topped revenue projections. This number fell short of both the 5-year average of 69 percent and the 10-year average of 64 percent.
IT and Healthcare, once again, were among the leaders, with 84 percent and 78 percent of the firms' revenue coming in above expectations. On the flip side, the Utilities and Materials sectors saw some struggle, as 65 percent and 62 percent of companies reported revenues below projections.
In Q3, Uber and Southwest Airlines led the S&P 500’s top EPS surprises, exceeding expectations by 220 percent and 215 percent, respectively.
Other strong performers included EQT Corporation (beat expectations by 101 percent) and Pfizer (beat expectations by 73 percent).
On the downside, Smurfit Westrock and Caesars Entertainment were the two companies that posted the largest EPS shortfalls, missing estimates by 141 percent and 119 percent.
GE Vernova and Apple were also among those reporting weaker results, causing their EPS to fall short of estimates.
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