S&P 500 Q1 Earnings Stun Wall Street Again With Broad-Based Beats, Double-Digit Growth

Nearly 80% of S&P 500 companies exceeded earnings forecasts in the first quarter of 2025, helping the index post a 13.3% profit surge — its second straight quarter of double-digit growth.

According to the latest Earnings Insight report from FactSet, authored by vice president and senior earnings analyst John Butters, only 18% fell short of analyst forecasts.

About 98% of S&P 500 companies now have reported first-quarter results. And up to 78% beat earnings-per-share (EPS) expectations—a figure that outpaces both the 5-year average of 77% and the 10-year average of 75%.

“In aggregate, companies are reporting earnings that are 8.2% above expectations. This surprise percentage is above the
1-year average (+6.1%), below the 5-year average (+8.8%), and above the 10-year average (+6.9%),” Butters wrote.

The "Magnificent Seven" — Apple Inc AAPL, Microsoft Corp MSFT, Amazon.com Inc AMZN, Meta Platforms Inc META, Alphabet Inc GOOGL, Tesla Inc. TSLA, and Nvidia Corp NVDA — outperformed the broader index.

Six of the seven companies beat EPS estimates (86%), with an average earnings surprise of 14.9%, nearly twice the S&P 500 average.

See Also: Magnificent 7 Stun The Street With Best Earnings Beat Since 2021

Which Sectors Led The Upside?

Health Care topped the leaderboard with 92% of its constituents beating estimates, followed by Communication Services (87%) and Information Technology (86%).

At the opposite end, Utilities and Energy sectors posted the weakest beat rates at 61% and 64%, respectively.

Communication Services delivered the strongest upside surprises, boasting an average earnings surprise of +23.8%.

Meta Platforms Inc. beat by over $1 per share ($6.43 vs. $5.23), while Alphabet Inc. posted EPS of $2.81 against estimates of $2.02.

Other strong performers included Electronic Arts Inc. EA, Interpublic Group of Companies Inc. IPG, News Corp. NWSA, and Walt Disney Co. DIS.

Consumer Discretionary followed with a 9.4% surprise rate. Booking Holdings Inc. BKNG surged past expectations with $24.81 in EPS vs. $17.37 forecast, while NIKE Inc. NKE posted $0.54 vs. $0.30.

Health Care delivered an 8.6% surprise, with Pfizer Inc. PFE earning $0.92 per share vs. $0.67 estimate, and CVS Health Corp. CVS reporting $2.25 vs. $1.70. The sector also had the highest beat rate, with 92% of companies exceeding EPS forecasts.

Market Response: Positive Earnings Are Paying Off

Investors rewarded strong results. Companies that beat expectations saw their stock prices rise by an average of 1.9% from two days before to two days after earnings — the highest average gain since the third quarter of 2022.

Conversely, companies that missed expectations saw a more muted decline of -1.9%, smaller than the 5-year average drop of -2.3%.

Valuations Are Getting Stretched

The forward 12-month price-to-earnings (P/E) ratio for the S&P 500 rose to 21.3, above the 5-year average of 19.9 and the 10-year average of 18.4.

That increase reflects a 5.4% rise in the index since March 31, while forward EPS estimates have slipped less than 0.1%.

By sector, Consumer Discretionary (28.1) and Information Technology (27.2) have the richest valuations, while Energy (14.6) trades at the lowest.

The trailing 12-month P/E ratio also moved higher to 25.9, above the historical 5- and 10-year norms.

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