Optimism abounds across Wall Street research desks as year-end 2025 S&P 500® forecasts make their roundsearnings growth rate will likely come in just below the 6% mark for the third quarter. That’s rather solid considering that analysts were expecting the Q3 EPS rate of increase to be under 5% when the reporting season began. Looking ahead, the bulls will have something to cheer about if the consensus current quarter’s profit forecast verifies.
According to FactSet, the street sees a Q4 EPS growth acceleration, rising to 12%. That trajectory is then expected to persist through 2025; the per-share operating earnings growth pace for the S&P 500 is currently seen at 15%.Some pundits claim that a mid-teens EPS growth rate is a high bar, and while historical trends point to earnings estimates generally declining through the first half of a calendar year, companies around the world are showing investors the money, so to speak.
In fact, on a rolling four-quarter basis, the percentage of EPS increases versus decreases has hit 5.6%, the best in three years.For investors, determining whether these trends are signal or noise is the big conundrum. Consider that when companies report better earnings, it could be a sign of too much optimism. After all, stocks tend to discount news, particularly backward-looking trends like a previous period’s earnings profile.
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