10 out of 10 of 11 large blocking divisions stocks grew – most in 3 years
It was the (informal) earnings season (informal) with NVDA reporting earnings yesterday afternoon (they beat, with a 71% increase in year-on-year earnings).
It turned out to be a very strong quarter (for the Big Hat).
When we conducted a fourth-quarter revenue preview a month ago, analysts expected that 4 sectors (staple food, industry, materials and energy) would see negative earnings growth (partially due to headwinds and a -10% drop in energy prices).
Fast forward one month, and only energy can achieve negative returns growth. In three years, the 10 departments in the active territory have the largest number.
And, as we emphasized last summer, this suggests that revenue does expand outside of Mag 7.
Big Hat’s based on widespread revenue growth, financial strength ends a small cap earnings recession
This broad-based strength helps improve the highest revenue growth for the S&P 500 (pictured below, orange bar) over three years, while the Nasdaq-100 (the lighter blue bar) earns the highest.
For small hats, income is no Based on a wide range, there are four sectors in negative regions. However, for the first time in 2½ years, the revenue of the Little Hat has grown positively (green bar). Income recession.
The majority of the rebound in the small hat came from financial conditions, with financial earnings rising by 31%. As we discussed in the earnings preview, financial revenues benefit from increasing transaction revenues, and post-election optimism increases loans and transactions. (China CAP Financials also reached a year-on-year earnings growth of +25%, but this is not enough to offset the negative earnings growth in the four sectors).
Revenue growth in 2025 is expected to hold (big hat) or a solid positive (middle cover)
So, by the end of most of 2024, the question is whether income can remain stable… or increase in 2025.
Now, analysts are optimistic (picture below). Earnings growth is expected to be maintained in 2025 (NASDAQ-100® and S&P 500), or firmly positive (S&P 400 and 600).
For mid-covers and small hats, it’s easy to understand why this is:
- Last year, they compared to negative earnings growth
- They benefit from lower interest rates because their floating rate debt is higher
- There is also a solid economy
- And any new tax cuts we may see (no new improvements in the extension of 2017 tax cuts)
For large NASDAQ-100® and S&P 500, this is even more difficult:
- They must manage 10+% of revenue 2ND One year in a row (they did both in the 2017-18 season)
- When the profit margin has already appeared at the record high
- In a still solid economy, growth may slow down than in 2024
- And they don’t have much contact with floating rates, so lower rates don’t help
One thing that can help Big Hat is that analysts projected the recent expansion to continue. All sectors are expected to see positive growth in 2025 after negative earnings growth in several sectors last year. We will first look at whether Big Hat can meet these lofty expectations within the months of the Q1 earnings season.
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