In a recent fourth quarter earnings season tracking report, J.P. Morgan said that 78% of S&P500 companies in U.S. that have reported beat profit estimates, representing a growth of 5% year-over-year.
With nearly 70% of the S&P500 companies (SP500) having reported Q4, the brokerage said that commodity sector (XLE) (XME) and healthcare (XLV) are coming in weak, while discretionary (XLY), technology (XLK) and communication services (XLC) are driving bulk of the earnings growth.
Exclude the fourth quarter earnings results for the Magnificent 7 stocks’, which includes Alphabet (GOOG), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Tesla (TSLA), and Nvidia (NVDA), EPS growth for the U.S. declined 4% year-over-year, according to J.P. Morgan.
On the topline, 57% of companies are beating sales estimates, with overall revenue growth being +4% y/y. Energy, Materials and Utilities (XLU) are seeing negative growth at a sector level.
“Notably, a smaller proportion of US companies are raising EPS guidance this quarter – the lowest since 2020,” wrote analyst Mislav Matejka and team.
Coming to European earnings season, 46% of Stoxx600 companies expected to report have released Q4 earnings. 52% beat EPS estimates, negatively by 3%. Overall EPS growth declined 8% y/y, with Commodity sectors and Industrials being the biggest drag to overall earnings. Revenue growth for European companies declined 6% compared to a year ago.
Some companies which issued profit warnings:
Fedex (FDX) – The company’s stock fell after it trimmed revenue forecast for the fiscal year because of volatile macroeconomics and lower demand. (1-day performance relative to the market: -10.6%)
Nike (NKE) – Nike cut its revenue outlook as consumers are becoming cautious about discretionary spending. (1-day performance relative to the market: -12%)
Mobileye Global (MBLY) – Shares plunged after an autonomous driving tech leader warned about customers scaling back orders. (1-day performance relative to the market: -24.2%)
Mettler-Toledo International (MTD) – Company ticked down after Q4 results are below guidance due to shipping delays. (1-day performance relative to the market: 0.5%)