BLOG — Oct 09, 2023
S&P 500 Q2 2024 Sector Earnings & Revenue Data
By Nicholas Ephraim
In Q2 2024, 78% of S&P 500 constituents surpassed EPS expectations vs. S&P Capital IQ Estimates, the same as in Q1 2024, a 4% increase compared to Q4 2023 and 2% below Q3 2023.
Year-over-year, the S&P 500 recorded an EPS growth rate of 16.3%, decreasing from 17.2% in Q1 2024 and 18.9% in Q4 2023 but well above Q2 and Q1 2023 at 4.3% and 2.6% respectively.
In Q2 2024, 61% of S&P 500 constituents outperformed revenue expectations vs. S&P Capital IQ Estimates, a 2% increase from the previous quarter, but still 4% down from Q4 2023.
EPS Beats and Misses %
In Q2 2024, 78% of S&P 500 constituents surpassed EPS expectations vs. S&P Capital IQ Estimates, the same as in Q1 2024, a 4% increase compared to Q4 2023 and 2% below Q3 2023. Although the percentage didn’t grow in Q2, the quarter saw anticipation build for the rate cut that the Federal Reserve finally declared in Q3, anticipation that has generated a bullish outlook throughout most of 2024. Tempering that optimism is the November 2024 U.S. presidential election, which will likely have impact across the market into 2025 no matter who wins.
Turning now to the individual sectors, Health Care had the highest percentage of firms surpassing EPS estimates at 89%, finally dethroning Information Technology from the top spot it’s held for the last three quarters. Health Care’s beat percentage has climbed over the last few quarters from 78% in Q2 and Q3 2023, 86% in Q1 2024 and up three more points in Q2. After Health Care, Financials was the next highest sector with 87% of constituents surpassing EPS estimates. This was a leap for Financials, which had only 71% of firms surpassing in Q1 2024, 70% in Q4 2023 and 80% in Q3 2023. Rounding out the top three was Industrials with 81%, which was a 4% decrease from last quarter.
This quarter, Communication Services had the lowest percentage of firms surpassing EPS estimates with 68%, the same as the previous quarter but still higher than Q4 2023’s 56%. After Communication Services, Real Estate was just slightly higher with 70% of firms outperforming EPS estimates. Although Real Estate was the second lowest sector, this still was a big improvement from previous quarters, with only 52% of firms surpassing in Q3 and Q4 2023 and 65% in Q1 2024. Rounding out the bottom three was a tie between Consumer Discretionary and Consumer Stapes, both with 73%.
EPS Growth % (Q2 2023 vs. Q2 2024)
Year-over-year, the S&P 500 recorded an EPS growth rate of 16.3%, decreasing from 17.2% in Q1 2024 and 18.9% in Q4 2023 but well above Q2 and Q1 2023 at 4.3% and 2.6% respectively. Although the growth rate has slowed over the last few quarters, this Q2 growth rate still demonstrates strong performance across the index year-over-year. Even the negative-growth sectors are much improved. We observed the same negative sectors this quarter as last, Energy and Materials, though this quarter’s results were -1.7% and -0.9%, respectively, compared to -25.0% and -7.7% in Q1.
The highest performing sector of the quarter was Communication Services with 46.8%. Communication Services has held the top spot since Q3 2023, though the growth rate has begun to slow down. Last quarter, it was 73.6%, and in Q4 2023, it was 96.3%. After Communication Services, Financials was the next highest sector with 25.9%, a slight increase from Q1 2024’s growth rate of 22.0%. Rounding out the top three was Information Technology with an EPS growth rate of 15.9%, decreasing from the previous two quarters of 17.3% and 30.6%, respectively.
Utilities, Consumer Staples, Consumer Discretionary and Health Care all recorded low double digit growth rates. Industrials recorded a low single digit growth rate of 3.4%, while Real Estate was barely positive with 0.1%, both of which were decreases from the previous two quarters.
YoY Revenue Growth % (Q2 2023 vs. Q2 2024)
Overall, Q2 2024 revenue for the S&P 500 recorded a growth rate of 11.2% year-over-year, an increase over the 10.9% observed in Q1, 9.3% in Q4 2023 and 5.9% in Q3 2023. Information Technology was the highest growth sector, claiming the top spot from Communication Services, which had been the leader for the previous two quarters. Information Technology recorded a 17.5% revenue growth, continuing a trend of rising growth rates that included an increase of 14.8% last quarter, 10.3% in Q4 2023 and 6.8% in Q3 2023. After Information Technology, Communication Services was the next highest sector with 13.8%, though this was a decrease from 15.7% the previous quarter. Combined, the two sectors boast such high-performing companies as Apple, Nvidia, Meta, Alphabet and Microsoft, so it wouldn’t be surprising to see these two sectors near the top for the foreseeable future.
After Communication Services, the next highest sector was Energy with 10%, showing positive growth for the first time in six quarters. Energy was also the only other sector outside of Information Technology and Communication Services to record double digit growth year-over-year.
The worst performing sector this quarter was Industrials with -2.8%, down from 3.5% the previous quarter. After Industrials was Utilities at -0.1, the only other sector to record negative growth, though it was an improvement from -9.9% last quarter and -4.7% in Q4 2023. Rounding out the bottom three was Materials with 1.5%. All the other sectors recorded mid-high single digit growth rates.
Source: S&P Capital IQ Pro. Data as of September 27, 2024.