11 Surprising Facts from the Earnings Season & My Favorite Stock So Far
Sunday, Nov 3, 2024 5:50 pm ET
The Q3 earnings season has brought a mix of surprises, with some sectors reporting strong results while others face challenges. As investors, it's crucial to stay informed about these trends to make strategic investment decisions. Here are 11 surprising facts from the earnings season and my favorite stock so far.
1. **Earnings growth is slowing**: The S&P 500 is reporting its lowest earnings growth rate since Q2 2023, with blended earnings growth for Q3 2024 at 3.6%.
2. **Tech sector rebounds**: The tech sector is leading the earnings growth picture, with Q3 earnings up 25.4% and expected to bring in 28.5% of the S&P 500's total earnings over the coming four-quarter period.
3. **Energy sector struggles**: The energy sector is reporting a year-over-year decline in earnings, led by the Energy sector, which is down 13.7%.
4. **Revenue growth remains strong**: The blended revenue growth rate for the third quarter is 4.9%, marking the 16th consecutive quarter of revenue growth for the index.
5. **Earnings surprises**: 75% of S&P 500 companies have reported actual EPS above estimates, while 65% have beaten revenue estimates.
6. **Positive EPS surprises in Financials and Consumer Discretionary sectors**: Companies in these sectors have been the largest contributors to the increase in the overall earnings growth rate for the index.
7. **Downward revisions in Industrials, Health Care, and Energy sectors**: These sectors have seen significant downward revisions to EPS estimates, partially offsetting the positive EPS surprises.
8. **iPhone 16 launch boosts Apple**: Apple reported a new September quarter revenue record of $94.9 billion, up 6% year-over-year, driven by the iPhone 16 launch and strong Services growth.
9. **EV demand slows**: The EV leader in the Mag 7 was the only name in the group to post negative year-over-year earnings growth in Q4, citing historically high interest rates and growing pains in the market.
10. **Consumer spending shifts**: Consumers are becoming more discerning in their spending, prioritizing smaller projects and big-ticket items like EVs, as evidenced by a major home improvement chain's Q4 results.
11. **Earnings guidance improves**: Companies like Nvidia, Mastercard, and General Motors have shown significant improvements in their earnings guidance for the upcoming quarters, reflecting their strong Q4 performances and optimism for future growth.
My favorite stock so far: Nvidia (NVDA) - Nvidia reported record-breaking quarterly sales of $22.1 billion, a 265% bump year-over-year, driven by its cutting-edge technologies and AI revolution. The company's non-GAAP EPS of $5.16 beat estimates by 52 cents, and its improved gross margin of 76% demonstrates its profitability and solid financial standing. Nvidia's strong Q4 performance and optimistic outlook for the first quarter of fiscal 2025, with projected sales to hit $24 billion, make it my favorite stock so far.
In conclusion, the Q3 earnings season has been filled with surprises, with some sectors showing significant improvements in earnings growth compared to the previous quarter. My favorite stock so far, Nvidia, has demonstrated strong performance and growth potential, making it an attractive investment opportunity. As investors, staying informed about these trends and making data-driven decisions will be crucial for navigating the market in the coming quarters.
1. **Earnings growth is slowing**: The S&P 500 is reporting its lowest earnings growth rate since Q2 2023, with blended earnings growth for Q3 2024 at 3.6%.
2. **Tech sector rebounds**: The tech sector is leading the earnings growth picture, with Q3 earnings up 25.4% and expected to bring in 28.5% of the S&P 500's total earnings over the coming four-quarter period.
3. **Energy sector struggles**: The energy sector is reporting a year-over-year decline in earnings, led by the Energy sector, which is down 13.7%.
4. **Revenue growth remains strong**: The blended revenue growth rate for the third quarter is 4.9%, marking the 16th consecutive quarter of revenue growth for the index.
5. **Earnings surprises**: 75% of S&P 500 companies have reported actual EPS above estimates, while 65% have beaten revenue estimates.
6. **Positive EPS surprises in Financials and Consumer Discretionary sectors**: Companies in these sectors have been the largest contributors to the increase in the overall earnings growth rate for the index.
7. **Downward revisions in Industrials, Health Care, and Energy sectors**: These sectors have seen significant downward revisions to EPS estimates, partially offsetting the positive EPS surprises.
8. **iPhone 16 launch boosts Apple**: Apple reported a new September quarter revenue record of $94.9 billion, up 6% year-over-year, driven by the iPhone 16 launch and strong Services growth.
9. **EV demand slows**: The EV leader in the Mag 7 was the only name in the group to post negative year-over-year earnings growth in Q4, citing historically high interest rates and growing pains in the market.
10. **Consumer spending shifts**: Consumers are becoming more discerning in their spending, prioritizing smaller projects and big-ticket items like EVs, as evidenced by a major home improvement chain's Q4 results.
11. **Earnings guidance improves**: Companies like Nvidia, Mastercard, and General Motors have shown significant improvements in their earnings guidance for the upcoming quarters, reflecting their strong Q4 performances and optimism for future growth.
My favorite stock so far: Nvidia (NVDA) - Nvidia reported record-breaking quarterly sales of $22.1 billion, a 265% bump year-over-year, driven by its cutting-edge technologies and AI revolution. The company's non-GAAP EPS of $5.16 beat estimates by 52 cents, and its improved gross margin of 76% demonstrates its profitability and solid financial standing. Nvidia's strong Q4 performance and optimistic outlook for the first quarter of fiscal 2025, with projected sales to hit $24 billion, make it my favorite stock so far.
In conclusion, the Q3 earnings season has been filled with surprises, with some sectors showing significant improvements in earnings growth compared to the previous quarter. My favorite stock so far, Nvidia, has demonstrated strong performance and growth potential, making it an attractive investment opportunity. As investors, staying informed about these trends and making data-driven decisions will be crucial for navigating the market in the coming quarters.