For Immediate Release
Chicago, IL – February 10, 2025 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Shopify SHOP, Lyft LYFT and DoorDash DASH.
5 Explanations for Our Current Earnings Outlook
We are in the second month of the New Year, but we will not fully close the books on 2024 till the ongoing Q4 earnings season is fully behind us. The focus lately has been on the Mag 7 results that many in the market found to be relatively underwhelming, but that negative view is more likely a reflection of these Tech leaders’ huge AI-centric capex budgets and less about the substance of their earnings power, which continues to be not only enormous but also sustainable.
As we have been flagging here all along, the overall earnings picture remains strong and reassuring, with the tone and substance of management commentary adding to confidence in current market expectations of a significant growth ramp-up in 2025 and beyond.
These numbers represent the bottom-up aggregates for the index. In other words, we take the earnings estimates of the sell-side analysts, most of whom contribute their estimates to Zacks. This allows us to create the Zacks Consensus EPS for each stock that we then aggregate to the respective sector and the overall index.
As you can see, the expectation is that aggregate 2025 earnings of $2.352 trillion will be up +13.5% from the $2.072 trillion in 2024. This would follow the +7.5% earnings growth in 2024. Please note that had it not been for the drag from the Energy sector, the earnings growth in 2024 and 2025 would be +9.6% and +14%, respectively.
Let’s focus on 2025 and drill down where this impressive growth is expected to come from.
Unlike 2024, when most of the growth came from the Tech sector, 2025 growth is very broad-based, with 15 of the 16 Zacks sectors expected to have positive earnings growth (the Industrial Products sector is expected to see a -0.1% decline in 2025).
If you exclude the Tech sector from the S&P 500 index, total 2025 earnings for the rest of the index would be up +11.9% (vs. +13.5% as a whole).
Estimates peaked in July 2024 and have been steadily trending down ever since. But before you fully internalize this negative development on the earnings front, let’s ‘look under the hood’ at the sector level to see if anything unusual is happening there.
Maybe a big part of the negative revisions to aggregate estimates since July 2024 result from the earnings pressure in the Energy sector.
All of the downtrend in the aggregate numbers was due to the Energy sector, with ex-Energy estimates actually modestly up since last Summer. However, they seem to have started coming down over the past month. It could be a new development or something transitory.
The revisions trend for the Tech sector has been very favorable. But as with the ex-Energy picture, there appears to be a modest downtick in estimates over the last few weeks. We will have to monitor it closely to ensure it isn’t the start of a new and unfavorable turn in the overall earnings picture.
Q4 Earnings Season Scorecard
Through Friday, February 7th, we have seen Q4 results from 308 S&P 500 members, or 61.6% of the index’s total membership. Total earnings for these companies are up +13.8% from the same period last year on +5.9% higher revenues, with 77.3% beating EPS estimates and 64.9% beating revenue estimates.
Key Earnings Reports This Week
We have almost 500 companies on deck to report results this week, including 78 S&P 500 members. In addition to blue-chip players like McDonald's, DuPont, Deere, Coke, CVS, and many others, we also have up-and-coming players like Shopify, Lyft, DoorDash, and others reporting results this week.
Shopify shares were up following each of the last two quarterly releases and the stock has done really well over the past year, up +37.2% vs. +23% for the S&P 500 index and +37.2% for Amazon. Shopify is expected to bring in 44 cents in EPS on $2.72 billion in revenues, representing year-over-year gains of +29.4% and +27%, respectively.
Lyft shares were up big following the last quarterly release on November 6th, but the stock has practically given back all those gains. Lyft shares have done better than Uber over the past year, but have lagged the broader market.
The Earnings Big Picture
Excluding the contribution from the Mag 7 companies, Q4 earnings for the rest of the S&P 500 index would be up +8.2% on +4.4% higher revenues.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>> Mag 7 Members Report Strong Earnings, Double Down on CapEx
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Just Released: Zacks Top 10 Stocks for 2025
Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential.
Shopify Inc. (SHOP) : Free Stock Analysis Report
Lyft, Inc. (LYFT) : Free Stock Analysis Report
DoorDash, Inc. (DASH) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
