S&P 500 Earnings Show Strong Growth as Retail Sector Reports Ahead

S&P 500 earnings are up 12% as retail companies gear up for reports. With a significant majority exceeding EPS and revenue estimates, investor sentiment remains strong, particularly for Walmart and Amazon as they navigate changing consumer trends.

Date: 21-02-2025

AI Rating: 7

Strong Earnings Performance
Total earnings for 403 S&P 500 companies have risen by +12.0% from the previous year, driven by a +5.5% increase in revenues. A significant 77.9% of these companies have exceeded their EPS estimates, indicating healthy corporate performance overall.

Retail Sector Dynamics
The retail sector is particularly noteworthy, with 54.5% of Zacks Retail companies reporting Q4 results showing an impressive +45.9% rise in earnings with +8.5% higher revenues. While most companies exceeded EPS and revenue expectations, excluding Amazon, the reported growth rates for earnings and revenue adjusted to -0.9% and +6.2%, respectively. This highlights Amazon's influence on the retail sector's metrics.

Comparative Landscape
Walmart has shown remarkable momentum, evidenced by a +15.4% stock increase this year, compared to the S&P's +4.1% and its competitors. This growth is attributed to Walmart's strong operability, particularly in e-commerce, which has improved its competitive stance against Amazon. In contrast, Target faces ongoing challenges due to a lower exposure to groceries and underperformance in discretionary goods, impacting its stock negatively.

Outlook for Tech Sector
The tech sector continues to be a driving force with anticipated earnings growth of +24.2% this quarter on +11.0% higher revenues. However, there are indications of a shift, with estimates being adjusted downwards across most sectors.

Overall Earnings Projection
Total S&P 500 earnings for Q1 2025 are projected to grow by +7.0%, though revisions indicate a broad decline in expectations across most sectors, with the exception of Medical.

Stocks: AMZN TGT WMT