The banks and other Finance sector companies gave us a strong start to the Q4 earnings season. However, we will see if this favorable trend continues this week as the Q4 reporting cycle really ramps up, with more than 150 companies reporting results, including 36 S&P 500 members. By the end of the week, we will have seen Q4 results from more than 15% of S&P 500 members, giving us a very good sense of the overall earnings season.Through Friday, January 17th, we have seen Q4 results from 42 S&P 500 members that collectively account for 9.5% of the index’s total market capitalization. Total earnings for these companies are up +21.8% from the same period last year on +7.3% higher revenues, with 81% of the companies beating EPS estimates and 71.4% beating revenue estimates.The proportion of these 42 index members beating both EPS and revenue estimates is 66.7%.This is a better performance than we have seen from this group of 42 index members in other recent periods, as the comparison charts below show. The first set of comparison charts shows the earnings and revenue growth rates.
Image Source: Zacks Investment ResearchThe second set of comparison charts compares the Q4 EPS and revenue beats percentages in a historical context.
Image Source: Zacks Investment ResearchThe comparison charts below spotlight the revenue performance and the blended beats percentage for this group of 42 index members.
Image Source: Zacks Investment ResearchAs you can see in the above charts, we are off to a great start in the Q4 reporting cycle, with companies handily beating consensus estimates and the growth pace representing an acceleration from the trend line of recent quarters.Since the Finance sector is heavily represented in the aggregate index results at this stage, it may be premature to extrapolate from this sample of results. With a relatively bigger sample of results by the end of next week, we should have a better view of the overall earnings picture.Finance sector Q4 results show a +24.4% earnings increase on +11% higher revenues, with 100% beating EPS estimates and 81.3% surpassing revenue estimates. Through Friday, January 17th, we have seen Finance sector results from 17.6% of the sector companies that collectively account for 35.1% of the sector’s market capitalization in the S&P 500 index.The comparison charts below put the Q4 results from these Finance sector companies in a historical context.Here is how the Q4 earnings and revenue growth rates for these Finance companies compare to other recent periods.
Image Source: Zacks Investment ResearchHere is how the Q4 EPS and revenue beats percentages for these companies compare to other recent periods.
Image Source: Zacks Investment Research
Key Earnings Reports This Week
The 36 S&P 500 members on deck to report results this week include several Finance sector operators like credit card issuers Capital One Financial (COF – Free Report) , Discover Financial (DFS – Free Report) , American Express (AXP – Free Report) , and Ally Financial (ALLY – Free Report) . But there are operators from other sectors as well, like Netflix, 3M Company, Proctor & Gamble, Johnson & Johnson, Texas Instruments, and Verizon Communications. We also have a number of railroad operators and air carriers reporting this week, including Union Pacific, CSX Corp, United Airlines, American Airlines, and others.The credit card stocks have enjoyed an impressive run, particularly in the post-election period. Many in the market will be watching if these stocks can sustain their momentum after this week’s results. The read-through from the major banks is favorable, as credit quality metrics from the banks are relevant to American Express, Discover, Capital One, and others as well.The chart below shows the one-year performance of American Express, Discover Financial, Capital One Financial, and Ally Financial relative to the Zacks Finance sector and the S&P 500 index.
Image Source: Zacks Investment Research
The Earnings Big Picture
The chart below shows the Q4 earnings and revenue growth expectations in the context of where growth has been in the preceding four quarters and what is expected in the coming four quarters.
Image Source: Zacks Investment ResearchThe chart below shows the overall earnings picture on a calendar-year basis, with double-digit earnings growth expected in 2025 and 2026.
Image Source: Zacks Investment ResearchPlease note that the robust growth expected in 2025 is not driven by one or two sectors but is rather broad-based. All 16 Zacks sectors are expected to enjoy earnings growth in 2025, with 10 of the 16 Zacks sectors expected to achieve double-digit earnings growth.More By This Author:Q4 Earnings Season Kicks Off Strong
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