The Recent Surge in Q1’25 EPS Growth Expectations
The latest data from the LSEG Earnings Scorecard reveals a significant increase in the expected growth rate for Q1’25 EPS. In just the last week, the expected growth rate has jumped from +9.7% to +13.6%. This sharp rise in expectations has led to lower revisions for Q2’25.
Key Insights from the LSEG Earnings Scorecard:
– Upside surprise for Q1’25 S&P 500 EPS stands at +7%, while it’s only +0.9% for Q1’25 revenue, indicating strong margin control within the reporting companies.
– Historically, seeing +7.5% to 8% upside surprises in S&P 500 EPS is uncommon, making the current situation noteworthy.
– Sector-level changes in expected 2025 sector growth rates show a notable increase in the communications services sector, driven by companies like Meta Platforms (NASDAQ:). Technology also saw a slight increase, while every other sector experienced a decrease, except for financials, which saw a slight uptick.
Unveiling the Fishhook Pattern
The fishhook pattern, as coined by Ed Yardeni, is a recurring trend where sell-side analysts and strategists become conservative ahead of earnings season, only to witness actual results surpassing estimates. This reverse fishhook pattern is evident in the recent earnings reports for Q1’25.
Net Income Trends and Market Predictions:
– LSEG provides insights into the net income levels, which saw fluctuations from around $515 billion to over $530 billion since the beginning of Q1’25 earnings season.
– It’s advisable not to time the market based solely on S&P 500 earnings estimates. Instead, focus on tracking sector growth rates, particularly upward revisions in sector EPS growth rates, which offer valuable insights for investors.
Market Outlook and Potential Factors:
– Amidst uncertainties surrounding Presidential tweets, headlines, and potential policy changes, predicting Q2 and Q3’25 S&P 500 earnings becomes challenging.
– Despite the volatility, there are positive indicators, such as changing market leadership, with non-US markets showing resilience and emerging markets responding positively to recent developments.
– High yield credit spreads have been fluctuating, indicating market sentiment, while potential tax reforms could impact corporate earnings in the future.
In conclusion, while the information presented is insightful, it’s essential to remember that this is not financial advice but an opinion based on current market trends. Past performance does not guarantee future results. Stay tuned for more updates and analysis in the upcoming weekend. Thank you for reading!
Analysis of the Content:
The rewritten content highlights the recent surge in Q1’25 EPS growth expectations and provides key insights from the LSEG Earnings Scorecard. It explains the fishhook pattern in earnings trends, emphasizes the importance of tracking sector growth rates, and offers a market outlook with potential influencing factors. The content is informative, engaging, and accessible to readers, making complex financial data easier to understand. Overall, it provides valuable information for investors and individuals looking to stay informed about market trends and their financial implications.