With another earnings season almost complete, it might be useful for investors to look further ahead. Each earnings season, we can see 70% to 80% of the S&P 500 “beating” consensus quarterly profit estimates. But that in part reflects subdued expectations based on part on companies’ guidance.
Another reason quarterly earnings be not be very useful is that can be distorted by one-time items, such as write-downs of goodwill related to acquisitions a company made at premium prices, litigation charges, marks-to-market for investments, etc.
But over the long term, rising EPS support higher price-to-earnings valuations and can help drive share prices higher.
Below is a screen of consensus earnings-per-share estimates among companies in the S&P 500
,
isolating the ones for which the 2024 profit estimates have increased the most since June 30. This incorporates any changes to expectations based on events so far this year, while leaving out one-time distortions to profit numbers.
Once in a while there will be a surprising development coming out of an earnings report, and the most notable was Nvidia Corp.’s
NVDA
estimate in May that its revenue for its fiscal quarter ending July 31 would be about 50% higher than sales for the quarter ended April 30. Nvidia is scheduled to report results for the quarter ended July 31 on Aug. 23.
That sort of development is already baked into analysts’ expectations for the current calendar year, making another case for screening the 2024 estimates.
Before diving into the results of the screen, let’s see how weighted aggregate consensus EPS estimates for the 11 sectors of the S&P 500 have moved since the end of June, with the full index at the bottom. Weighted price changes are also included, excluding dividends.
| Sector | Change in 2024 EPS estimate | Consensus 2024 EPS estimate | Consensus 2024 EPS estimate as of June 30 | Price/ consensus 2024 EPS estimate | 2023 price change | 2022 price change |
| Communication Services | 3.7% | $14.21 | $13.71 | 15.8 | 41.1% | -40.4% |
| Consumer Discretionary | 3.0% | $54.14 | $52.55 | 24.7 | 33.1% | -37.6% |
| Information Technology | 0.4% | $121.75 | $121.25 | 24.2 | 35.6% | -28.9% |
| Industrials | 0.4% | $51.43 | $51.24 | 17.9 | 10.7% | -7.1% |
| Real Estate | 0.0% | $14.32 | $14.31 | 16.4 | 0.9% | -28.4% |
| Utilities | 0.0% | $20.47 | $20.47 | 16.0 | -8.7% | -1.4% |
| Consumer Staples | -0.3% | $40.33 | $40.43 | 19.5 | 0.8% | -3.2% |
| Financials | -0.5% | $44.19 | $44.42 | 13.1 | 1.8% | -12.4% |
| Healthcare | -1.0% | $91.78 | $92.73 | 17.2 | -0.4% | -3.6% |
| Energy | -2.9% | $56.41 | $58.08 | 12.2 | 2.2% | 59.0% |
| Materials | -4.3% | $29.57 | $30.90 | 17.6 | 6.3% | -14.1% |
| S&P 500 | 0.1% | $244.99 | $244.63 | 18.2 | 16.3% | -19.4% |
| Source: FactSet | ||||||
It may not be much of a surprise to see the communications services sector in the lead, because the group’s heavyweights include Meta Platforms Inc.
META,
for which the consensus 2024 EPS estimate for 2024 has increased 13% since the end of June, as you can see in the screen below.
The consumer discretionary sector ranks second and includes Amazon.com Inc.
AMZN,
which also made the screen below.
On the whole, the index’s weighted estimate for 2024 EPS has hardly budged since June 30.
The sector table also includes price-to-earnings ratios based on Aug. 11 closing prices and the consensus 2024 EPS estimates. These may not be very useful for direct comparisons of highly valued companies that are growing rapidly, but they provide frames of reference.
For the S&P 500 screen, we are taking a uniform approach, using estimates for calendar 2024, because about 20% of the S&P 500 (including Nvidia) have fiscal years that don’t match the calendar.
Here are the 20 stocks in the benchmark index for which consensus EPS estimates for calendar 2024 have increased the most since June 30:
| Company | Ticker | Change in 2024 EPS estimate | Consensus 2024 EPS estimate | Consensus 2024 EPS estimate as of June 30 | Price/ consensus 2024 EPS estimate |
| Iron Mountain Inc. | IRM | 37.9% | $1.87 | $1.35 | 32.4 |
| PulteGroup Inc. | PHM | 29.7% | $11.86 | $9.14 | 7.0 |
| D.R. Horton Inc. | DHI | 22.1% | $14.26 | $11.67 | 8.6 |
| Live Nation Entertainment Inc. | LYV | 19.4% | $1.74 | $1.45 | 49.9 |
| Moderna Inc. | MRNA | 18.6% | -$5.11 | -$4.31 | -19.8 |
| Amazon.com Inc. | AMZN | 18.2% | $3.09 | $2.62 | 44.8 |
| Royal Caribbean Group | RCL | 18.1% | $8.28 | $7.01 | 12.4 |
| Weyerhaeuser Co. | WY | 15.3% | $1.47 | $1.28 | 22.4 |
| Marathon Petroleum Corp. | MPC | 14.1% | $14.25 | $12.49 | 10.5 |
| Nvida Corp. | NVDA | 13.5% | $11.54 | $10.17 | 35.4 |
| NVR Inc. | NVR | 13.5% | $462.25 | $407.33 | 13.3 |
| Meta Platforms Inc. Class A | META | 13.3% | $16.80 | $14.83 | 18.0 |
| Caterpillar Inc. | CAT | 12.3% | $20.74 | $18.46 | 13.8 |
| Alexandria Real Estate Equities Inc. | ARE | 11.1% | $3.77 | $3.39 | 32.4 |
| KLA Corp. | KLAC | 8.9% | $24.44 | $22.45 | 19.6 |
| Molson Coors Beverage Co. Class B | TAP | 8.8% | $5.11 | $4.70 | 12.6 |
| General Electric Co. | GE | 8.7% | $4.31 | $3.96 | 26.6 |
| T. Rowe Price Group | TROW | 8.3% | $7.54 | $6.97 | 14.9 |
| Martin Marietta Materials Inc. | MLM | 8.2% | $20.06 | $18.54 | 22.7 |
| Sherwin-Williams Co. | SHW | 8.1% | $10.79 | $9.98 | 25.4 |
| Source: FactSet | |||||
Click on the tickers for more about each company, including business descriptions.
Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
Here’s the list again, now showing how the stocks have performed, excluding dividends, with summaries of analysts’ opinions:
| Company | Ticker | 2023 price change | 2022 price change | Share “buy” ratings | Aug. 11 price | Consensus price target | Implied 12-month upside potential |
| Iron Mountain Inc. | IRM | 21% | -5% | 56% | $60.47 | $61.50 | 2% |
| PulteGroup Inc. | 82% | -20% | 82% | $82.77 | $98.38 | 19% | |
| D.R. Horton Inc. | DHI | 38% | -18% | 59% | $123.01 | $145.35 | 18% |
| Live Nation Entertainment Inc. | LYV | 24% | -42% | 76% | $86.61 | $109.94 | 27% |
| Moderna Inc. | MRNA | -43% | -29% | 45% | $101.49 | $180.21 | 78% |
| Amazon.com Inc. | AMZN | 65% | -50% | 93% | $138.41 | $169.63 | 23% |
| Royal Caribbean Group | RCL | 108% | -36% | 63% | $102.82 | $118.47 | 15% |
| Weyerhaeuser Co. | WY | 7% | -25% | 58% | $33.02 | $38.89 | 18% |
| Marathon Petroleum Corp. | MPC | 29% | 82% | 79% | $149.75 | $152.76 | 2% |
| Nvida Corp. | NVDA | 180% | -50% | 86% | $408.55 | $515.55 | 26% |
| NVR Inc. | NVR | 33% | -22% | 29% | $6,156.73 | $6,610.00 | 7% |
| Meta Platforms Inc. Class A | META | 151% | -64% | 88% | $301.64 | $374.80 | 24% |
| Caterpillar Inc. | CAT | 19% | 16% | 42% | $285.22 | $286.48 | 0% |
| Alexandria Real Estate Equities Inc. | ARE | -16% | -35% | 100% | $122.12 | $155.78 | 28% |
| KLA Corp. | KLAC | 27% | -12% | 50% | $478.98 | $537.00 | 12% |
| Molson Coors Beverage Co. Class B | TAP | 25% | 11% | 21% | $64.22 | $69.69 | 9% |
| General Electric Co. | GE | 37% | -11% | 60% | $114.60 | $127.95 | 12% |
| T. Rowe Price Group | TROW | 3% | -45% | 0% | $112.33 | $104.33 | -7% |
| Martin Marietta Materials Inc. | MLM | 35% | -23% | 61% | $455.44 | $510.66 | 12% |
| Sherwin-Williams Co. | SHW | 15% | -33% | 53% | $273.72 | $299.58 | 9% |
| Source: FactSet | |||||||
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