Q4 Earnings Preview: What Wall Street Will Be Watching

As the fourth quarter of 2024 comes to a close, investors are eagerly anticipating the upcoming earnings season. With the S&P 500 index projected to report an 8% year-over-year (YoY) growth in earnings per share (EPS) for Q4, driven by a 4% sales growth and a 31-basis point margin expansion to 11.5%, the stage is set for a robust earnings season. However, several factors and companies will be under the microscope as Wall Street seeks to identify potential upside and downside surprises.



One key theme investors will be watching is the sustainability of corporate sales growth amid economic uncertainties. Despite the robust earnings growth projections, analysts will be scrutinizing whether revenue growth can maintain its current pace. Additionally, the political landscape in Washington, D.C., could influence corporate strategies and earnings performance in the coming quarters. As the U.S. prepares for a new administration, companies may adjust their strategies to align with potential shifts in fiscal policies, which could impact their bottom lines.

Another critical aspect investors will be focusing on is the resilience of mega-cap tech companies. Despite their heavy weighting in the S&P 500, these companies face intense competitive pressures and regulatory challenges. As such, investors will be closely monitoring their earnings performance to assess the sustainability of their superior growth rates.



Some companies expected to surprise on the upside or downside in the Q4 2024 earnings season include:

Upside Surprises:

1. Bumble (BMBL): Despite facing challenges with sticky inflation and high borrowing costs, Bumble is expected to report a 200% surge in earnings per share compared to the year-ago quarter. The company's recent acquisition of Geneva, a friendship and community-building platform, could also contribute to its growth.
2. Paramount Global (PARA): With significant subscriber growth for its streaming service, Paramount+, the company is expected to report a 150% surge in earnings per share compared to the year-ago quarter. The strong slate of returns and new originals added to the streaming platform in the to-be-reported quarter is likely to have driven viewership and subscription revenues.

Downside Surprises:

1. Tesla (TSLA): Despite reporting revenue growth of 2.2% and EPS of $0.73, Tesla missed revenue and EPS estimates for the quarter ended December 2024. The company's total vehicle deliveries and storage deployed also fell short of analyst estimates. This could indicate a potential downside surprise for the company in the upcoming earnings season.
2. Alphabet (GOOGL): Although Alphabet is expected to report earnings per share of $2.13 and revenue of $96.68 billion, which are in line with Wall Street expectations, the company faces intense competitive pressures in the AI space and regulatory challenges. These factors could limit the scale of EPS beats or even result in a downside surprise.

By closely monitoring these factors and companies, investors can better navigate the Q4 2024 earnings season and make more informed decisions about their portfolios. As the earnings season unfolds, investors should stay attuned to the latest data and insights to capitalize on potential opportunities and mitigate risks.