S&P500 earnings estimates for 2025 have rolled over and declined over the last few weeks.
At the same time, the S&P 500 continued to rise making valuations even more stretched (expensive). Will earnings estimates catch up or stocks fall? Source: Global Markets Investor
Quarterly revenue growth almost as parabolic as the stock price. 💸 $NVDA
Source: TrendSpider
⌛ S&P 500 EARNINGS HAVE BEEN DISAPPOINTING⌛
75% of companies beat Wall Street analysts' Q3 earnings expectations, the lowest share since Q4 2022. This is despite huge earnings estimates downgrades that took place in Sep This week will be extremely crucial as 42% firms report. Source. Global Markets Investor, Bloomberg
Google parent Alphabet reported Q3 earnings, which beat on top and bottom lines.
The company’s shares rose 4% on the results. Alphabet’s revenue grew 15% year over year, which is stronger than the same quarter last year. The company reported blow-out cloud revenue at $11.35 billion — up nearly 35% from the $8.41 billion a year ago. The company attributed its strong cloud results to their AI offerings, which includes subscriptions for enterprise customers. $GOOG Alphabet Q3 FY24: • Revenue +15% Y/Y to $88.3B ($2.0B beat). • Operating margin 32% (+4pp Y/Y). • EPS $2.12 ($0.27 beat). Google Cloud: • Revenue +35% Y/Y to $11.4B. • Operating margin 17% (+14pp Y/Y). YouTube ads +12% to $8.9B. Source: App Economy Insights
🥉 Swiss bank UBS smashes third-quarter expectations with $1.4 billion in profit (vs. $667.5 million expected)
👉 Group revenue was $12.33 billion, above analyst expectations near $11.78 billion. Q3 highlights included: - Operating profit before tax of $1.93 billion, up from a loss of 184 million in the same quarter last year. - Return on tangible equity hit 7.3%, compared with 5.9% over the second quarter. - CET 1 capital ratio, a measure of bank solvency, was 14.3%, down from 14.9% in the second quarter. The lender said it expects to complete its planned $1 billion share buyback program in the fourth quarter and intends to continue repurchases in 2025. 💪 UBS Sees Uninterrupted Client Momentum: Switzerland's largest bank reports strong transactional activity in its core business and expects to achieve its objective of $100 billion in net new assets by the end of the year. Source: CNBC
𝗧𝗲𝘀𝗹𝗮 𝗤𝟯 𝟮𝟬𝟮𝟰 𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 $TSLA
EPS: $0.72 vs $0.60 est. (beat) Revenue: $25.18B vs $25.67B est. (miss) Gross margin: 19.6% vs 16.8% est. (beat) Free Cash Flow: $2.74B vs $1.61B est. (beat) Outlook 2024: - Slight growth in vehicle deliveries - Doubling of energy storage Outlook 2025: - New vehicles start production with more affordable models leveraging current and next-gen platforms - Over 50% growth in vehicle production compared to 2023 Shares: +6.6% after hours Source: App Economy Insights, The Future Investors
😱 The shocking chart of the day >>> S&P 500 COMPANIES EARNINGS GROWTH DOES NOT EXIST WITHOUT MAGNIFICENT 7😱
In 5 out of the last 6 quarters, the S&P 500 excluding Magnificent 7 profit growth has been negative. It is estimated the Mag 7 net income will grow by 18% in Q3 2024 while the other 493 firms by 1%. Note however 2 changes in trend: 1) The Mag 7 eps growth is slowing down (from a high base); The non-Mag 7 EPS growth is picking up (and turning slightly positive) from a low base. Sometimes the second derivative is more important than the absolute number. Time will tell... Source: The Global Markets Investor
BofA: “today the average EPS growth rate among AI ETF constituents has fallen from 18% to just 5%, below the S&P 500.”
Source: Mike Zaccardi, CFA, CMT @MikeZaccardi via @dailychartbook
