Daily Spotlight: An Important Earnings Season Commences

Argus

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Apr 11, 2025

Summary

The 1Q25 EPS season is under way, launched, as usual by the earnings reports from the big banks. Next week, the floodgates will open with Consumer, Healthcare, and Industrial companies all releasing their quarterly results. Information Technology and Energy companies generally report later in the EPS period, and then the retailers wrap things up by late May. Consensus EPS estimates for 1Q25 growth range from low-single-digits to high-single-digits. This follows 17% growth in 4Q24 EPS and 9% growth in 3Q24, according to LSEG I/B/E/S. Leading sectors for 1Q25 are expected to be Healthcare (+38% EPS growth year over year) and Information Technology (+16%). Growth from the so-called Magnificent 7 is expected to outpace overall growth, as the group's earnings are forecast to grow 18%. On the downside, earnings from the Energy sector are expected to decline 15% and Materials 7%. Drilling down, revenue is expected to increase 4%, led by IT (+11%) and Healthcare (+4%). The balance of earnings growth will come from margin improvement and share buybacks. For 2025, our full-year earnings estimate is $276, implying low double-digit growth from 2024 level. Remember, companies generally exceed earnings expectations. Last quarter, three quarters of companies exceeded consensus expectations, compared to