The Q4 2024 earnings season is set to begin, with analysts projecting an 8% year-over-year (YoY) growth in earnings per share (EPS) for the S&P 500, supported by robust corporate performance. Here's what investors need to know ahead of the season.

Key Projections

• Aggregate EPS Growth: 8% YoY
  • Driven by 4% sales growth and a 31-basis point margin expansion to 11.5%.
• Median EPS Growth: 6% YoY for the median S&P 500 constituent.
• Historical Trends: Over the past 11 quarters, realized EPS growth has exceeded consensus by an average of 4 percentage points.

Goldman Sachs cautions that while earnings are expected to be solid, the scale of EPS beats may moderate due to elevated consensus expectations, which are at their highest since Q4 2021.

Key Themes

1. Corporate Sales Growth Outlook

• Analysts will focus on whether revenue growth can sustain current levels amid economic uncertainties.

2. Impact of Political Changes

• Preparations for the upcoming administration in Washington, D.C., could signal shifts in fiscal policies affecting corporate strategies.

3. Mega-Cap Tech Resilience

• The sustainability of superior earnings growth in mega-cap tech will be scrutinized, particularly given the sector's heavy weighting in the S&P 500.

Sector Highlights

• Strongest Earnings Growth:
  • Communication Services and Information Technology are expected to lead, reflecting ongoing demand for digital and AI-driven solutions.
• Financials: Anticipated to post a 13% increase in profits, signaling strength in lending and investment activities.

How Investors Can Prepare

To navigate this earnings season effectively, investors should monitor data-backed insights and tools, such as:

1. Earnings Calendar API: Stay updated on key reporting dates.
2. Earnings Historical API: Compare current earnings against historical trends to gauge performance consistency.

Conclusion

While the Q4 2024 earnings season is expected to deliver strong growth, the elevated expectations could limit the scale of EPS beats. Investors should closely watch sector-specific trends and broader economic indicators to gauge the outlook for 2025.