Investors are understandably jazzed about Nvidia's upcoming earnings report for last year. Growth should be impressive. But analysts think a surprisingly large number of companies will grow even faster this year.
Eight companies in the S&P 500, including Allstate, Merck and Tyson Foods, are expected to post higher profit growth than Nvidia in 2024, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. If a company hasn't reported 2023 results yet, the analysis used estimates.
Faster profit growth than Nvidia? That's saying something. Nvidia is no profit growth slouch. The company is expected to earn $21.27 a share in calendar 2024, up 72% from what it's seen earning in 2023. But that pales next to what some firms are gearing up to report.
It's another example of how Nvidia's results are driving so much attention that many investors aren't looking anywhere else but AI. "Nvidia stock has (continued) to trade up into the numbers given extraordinarily strong checks from both supply chain and demand and availability," said Dan Morgan, analyst at Synovus.
Big Profit Growth In Insurance, Medicine
Investors are craving growth as it's been so hard to come by. S&P 500 companies' profit only grew by 0.9% in 2023, says John Butters at FactSet. But earnings growth for the S&P 500 is on track to top 10.9% in 2024.
And yet, when it comes to profit outgrowing Nvidia, it's not just tech. All eight of the S&P 500 companies expected to post better profit growth than Nvidia aren't in the tech sector. Allstate, an insurer, is the company to beat.
The insurance provider is expected to earn $12.72 a share in 2024. And if that's accurate, it would be 1,239% growth. That's the highest amount of profit growth analysts see coming from any S&P 500 company in 2024.
Insurers have moved aggressively to protect their profit. They're withdrawing from high-risk areas and lifting premiums in markets they remain in. Many insurers say such moves are necessary to defend their sustainability. It seems to be working at Allstate.
Following Allstate, drugmaker Merck is on deck to provide the next biggest bump in profit this year. Analysts think the company will make $12.72 a share in 2024. If that's accurate, it would be a 466% jump in profit.
Cancer drug Keytruda is providing a solid tailwind for Merck's profit. But analysts think many of the new bets the company is making will pay off. Merck late last year started working with Daiichi Sankyo to develop new antibody drug treatments. It also bought Prometheus Biosciences to jump-start its immunology portfolio.
And Merck isn't the only drugmaker with looming huge profit growth. Eli Lilly, fanned by its weight-loss and neurological treatments, is expected to post 98% profit growth in 2024.
Consumer Staples Profit Boom
Some investors might be surprised to find that profit at even household staples companies could outpace Nvidia's.
Analysts forecast profit at cosmetics maker Estee Lauder and meat processor Tyson Foods to each jump 125% in 2024. Both are in the consumer staples sector.
All this isn't to take away from the stellar financial results of Nvidia. It's just a reminder that AI, while exciting, isn't the only source of profit growth in the S&P 500.
2024's Biggest Projected S&P 500 Profit Growers
Based on 2024 estimates
| Company | Ticker | Sector | 2024 EPS growth (est.) |
|---|---|---|---|
| Allstate | Financials | 1,239.0% | |
| Merck | Health Care | 465.9% | |
| Stanley Black & Decker | Industrials | 184.6% | |
| Estee Lauder | Consumer Staples | 125.9% | |
| Tyson Foods | Consumer Staples | 125.1% | |
| Paramount Global | Communication Services | 115.3% | |
| Eli Lilly | Health Care | 98.0% | |
| Targa Resources | Energy | 82.3% | |
| Nvidia | Information Technology | 71.9% |
