S&P 500 Sees Highest YoY Revenue Growth Since Q4 2021

The reported 10.8% would be the highest earnings growth the index has experienced since Q4 2021.

Key Takeaways

• Despite the uncertain economic and geopolitical landscape in the U.S., investors remain bullish.
• The projected S&P 500 revenue growth for Q2 2024 stands at 5.2%.
• The predictions for revenue from Q3 2024 to Q3 2025 suggest continued positive trends in the future.

Despite the uncertain landscape of inflation, interest rates, debt levels and geopolitical space in and around the U.S., investors remain bullish that the Federal Reserve will achieve a soft landing for the States’ economy.  

In terms of Q2 2024, the S&P 500 is expected to have a blended earnings growth rate of 10.8%. This rate incorporates the actual outcomes of the firms that have made their reports and the estimated outcomes of those that have not.  

If this 10.8% is confirmed, it will be the highest earnings growth the index has experienced since Q4 2021, which stood at 31.4%. But, how is the SPX500/USD doing giving such an increase in earnings for Q2?  

The projected S&P 500 revenue growth for Q2 2024 stands at 5.2%, which is slightly below the 5-year average of 6.7%, but over the 10-year average of 5.1%.  

Image: S&P 500 revenue growth in a 5-year period, by FactSet

If the quarter's growth rate is set at 5.2%, it will be the highest revenue growth rate for the index since Q4 2022, which was slightly better at 5.4%. Moreover, this rate would sustain the trend, marking the 15th quarter a row of revenue growth compared to the same quarter of the previous year. This pace of growth would equal the record of eight consecutive quarters of year-over-year revenue growth set from Q3 2016 to Q1 2020, according to FactSet data.  

Analysing the performance by sector in Q2 2024, ten of the sectors are growing in revenue yearly.  The sectors leading this growth are:

• Information  

• Technology

• Energy

• Communication Services

However, the Materials sector is the only one witnessing a decline in revenues compared to the previous year.  

Moving forward, analysts have estimated that revenue for the S&P 500 will keep on rising in the next five quarters. The projections for revenue increase from Q3 2024 to Q3 2025 are 4.9%, 5.4%, 5.8%, and 6.2%, which suggests continued positive trends.