Q1 Earnings; The Devil Is in the Details

On financial websites, you may read, "First-quarter corporate reports were better than expected.” And that’s true. So far, 73% of Standard & Poor’s 500 companies have reported actual Q4 earnings per share above estimated earnings per share.¹

But the devil is in the details.

In Q4 2023, total S&P 500 earnings are projected to increase by almost $35 billion, or 7.4% from a year earlier. But let’s pull back the curtain and see what companies contributed the most and the least to that overall total.²

• The top 15 companies are projected to generate $61 billion in earnings, led by Nvidia ($10.6 billion) and Amazon ($10.3 billion). On a Y-over-Y basis, the top 15 will see earnings increase by 78%.²
• The middle 470 are expected to contribute $8.5 billion. Y-over-Y, a 2.6% increase on average.²
• The bottom 15 companies are projected to lose $35 billion, led by Pfizer (-$6.0 billion) and Citibank (-$4.2 billion). On a Y-over-Y basis, the bottom 15’s earnings will decline by 46.8%.²

What does it all mean?

It’s a cautionary tale about the dangers of watching headlines—they summarize the key points but may overlook important details. I work with professionals who spend time analyzing S&P 500 earnings reports so I can bring the most up-to-date information to any discussions we have about your investment strategy.

^{1. Insight.FactSet.com, February 16, 2024. “S&P 500 Earnings Season Update: February 16, 2024.” 395 companies in the S&P 500 have reported results as of February 16.}

^{2. Fundstrat.com, February 26, 2024}