As the Q4 2024 earnings season kicks off, analysts anticipate an impressive 8% year-over-year growth in earnings per share (EPS) for the S&P 500, backed by solid corporate performances. Investors should be aware of critical insights leading up to this earnings season.

Projected Performance Highlights

• Overall EPS Growth: Projected at 8% YoY, fueled by 4% sales growth and 31 basis points margin expansion to reach 11.5%.
• Median EPS Performance: Expect 6% YoY growth for the median S&P 500 firm.
• Historical Performance: In the past 11 quarters, realized EPS growth has consistently outpaced consensus by about 4 percentage points.

Goldman Sachs warns that while robust earnings are anticipated, the magnitude of EPS surprises may taper off due to elevated consensus expectations, which are at highs unseen since Q4 2021.

Key Recognition Areas

1. Challenging Corporate Sales Growth

• Investors will look for evidence that revenue growth remains effective despite broader economic pressures.

2. Political Landscape Impact

• Preparations for new administration setups in Washington, D.C. could impact fiscal policies affecting corporate forecasts.

3. Mega-Cap Resilience

• Special attention will be on the sustainability of strong earnings growth from mega-cap tech entities, given their significant influence on the S&P 500.

Sector Insights

• Leading Earnings Growth:
  • Communication Services and Information Technology are projected to shine, driven by ongoing demand for digital solutions.
• Financial Sector Growth: Expected profit increases of 13%, reflecting robust lending and investment performances.

Preparing for Earnings Season

To navigate the upcoming earnings season successfully, investors should utilize data-driven tools and insights, such as:

1. Earnings Calendar: Stay up-to-date on significant reporting dates.
2. Historical Earnings Analysis: Compare current performance against historical benchmarks to analyze trends.

Conclusion

While Q4 2024 is steered toward strong growth, high consensus expectations may limit the size of EPS beats. Investors must closely observe sector trends and economic indicators to evaluate the future outlook for 2025.