S&P 500 companies are gearing up for fourth-quarter earnings season. And some are seen putting up some massive profit growth.
Ten companies, including some of the Magnificent Seven like Amazon.com and Netflix, plus utilities like NRG Energy, are seen posting 50% or higher profit for the fourth-quarter of 2023, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. Such stellar results — due to be reported in coming weeks — will stand out amid what's seen as a lukewarm period for most S&P 500 stocks.
"The fourth quarter 2023 earnings reporting period is about to get underway," said Sam Stovall of CFRA. "S&P 500 fourth-quarter 2023 operating earnings per share (EPS) are expected to have risen 1.8% on a year-over-year basis."
Finding The Big S&P 500 Growth
So what kinds of S&P 500 companies are bucking the tide and putting up huge profit growth numbers?
It turns out several members of the Magnificent Seven — tech stocks that drove a bulk of stock gains in 2023 — are poised to outgrow the rest of the index. Take Amazon.com. Analysts think the retail company will earn 78 cents a share on an adjusted basis in the fourth quarter of 2023. If they're right, it would mark 2,516% growth from the mere 3 cents a share it made in the same year-ago period. Amazon is seen reporting its results on Feb. 2.
But Amazon is just one of the four Magnificent Seven stocks expected to post 50% or higher fourth-quarter profit. The others are Netflix, Nvidia and Meta Platforms.
Netflix, for instance, is on pace to make $2.23 a share in the fourth quarter, analysts say. That's up 1,759% from the same year-ago period. The company reports on Jan. 23.
Big Profit Growth From Utilities
Utilities stocks, too, are starting to rev up profit growth. Two of the 10 S&P 500 companies expected to boost profit by 50% or more are utilities.
NRG Energy is a solid example. The Houston-based electric utility on Feb. 23 is seen reporting $6.55 a share in the fourth quarter. That's up 1,309% from the same year-ago period.
If there was a mirror-stock universe last year to the Magnificent Seven, it's the utilities. The S&P 500 sector was one of the poorest performers in 2023 on a stock-growth basis. Utilities, plus most dividend-paying stocks, remained out-of-favor in light of rising interest rates. But now some of those companies are showing fundamental strength.
And such earning growth is key to keeping the S&P 500's rally alive. Analysts hope S&P 500 profit will rise 10.6% in 2024, Stovall says. That might help justify many of the big gains posted by some stocks last year.
Biggest Expected Profit Gainers
Based on fourth-quarter of 2023 estimates
| Company | Ticker | Fourth quarter earnings % ch. | Sector |
|---|---|---|---|
| Amazon.com | 2,515.6% | Consumer Discretionary | |
| Netflix | 1,759.2 | Communication Services | |
| NRG Energy | 1,308.8 | Utilities | |
| Constellation Energy | 1,143.0 | Utilities | |
| Nvidia | 411.6 | Information Technology | |
| Intel | 348.3 | Information Technology | |
| Healthpeak Properties | 313.2 | Real Estate | |
| Meta Platforms | 179.1 | Communication Services | |
| Brown-Forman | 166.3 | Consumer Staples | |
| Kimco Realty | 155.2 | Real Estate |
