Earnings growth expected to accelerate, with double-digit growth forecasted

From Nasdaq: 2024-10-02 19:25:00

Estimates for S&P 500 Q3 2024 have decreased significantly from July 1st, with earnings expected to be up +3.7% and revenues up +5.1%. Following a modest growth pace in Q3, double-digit earnings growth is forecasted for the next four quarters, reaching new all-time records each quarter.

JPMorgan and Wells Fargo will start off the Q3 earnings season for the Finance sector, with both stocks showing declines since September. JPMorgan’s full-year 2025 net interest income is a concern due to weak loan demand despite the Fed’s easing cycle. JPMorgan’s current EPS estimate is $16.72 with revenues of $172.03 billion.

Looking at the banking industry as a whole, Q3 earnings are expected to be -15.4% lower than last year with revenues up by +0.7%. The core banking business has faced challenges with interest margins, loan demand, and credit quality metrics. While inflation is easing, challenges remain despite easing Fed policy.

The negative revisions trend for Q3 earnings has been notable, impacting 14 of 16 Zacks sectors. Energy and Transportation sectors have seen significant downward revisions, while Tech and Finance sectors have positive revisions. Earnings growth is expected to improve from next quarter onwards, driven by margin gains and revenue growth.

This year’s +7.9% earnings growth reflects revenue weakness in the Finance sector, with margin gains accounting for the rest. Excluding Finance, earnings growth is +7.3% and revenue growth is +4.3%. About half of this year’s earnings growth comes from revenue growth. JPMorgan remains a stellar performer despite Q3 earnings decline expectations for various banks.



Read more at Nasdaq:: Earnings Growth Set to Accelerate