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• Total Q1 earnings for the 44 S&P 500 members that have reported results are up +6.9% from the same period last year on +5.8% higher revenues, with 72.7% beating EPS estimates and 70.5% beating revenue estimates.
• We continue to believe that this earnings season is less about what companies earned in the first quarter of 2025 and more about sizing up the earnings impact of the emerging tariff and macroeconomic backdrop. Guidance is always the most important aspect of any earnings season, but it will be an even more significant part of the Q1 reporting cycle.
• Q1 earnings for the ‘Magnificent 7’ group of companies are expected to be up +12.5% from the same period last year on +11.4% higher revenues. Excluding the ‘Mag 7’ contribution, Q1 earnings for the rest of the index would be up +5.2% (vs. +6.8%).
• For 2025 Q2, total S&P 500 earnings are expected to be up +8.6% from the same period last year on +4.1% higher revenues. Estimates for the period have started coming down, which aligns with the negative trend we experienced before the start of the Q1 earnings season.

The Evolving Earnings Outlook
 

There were no major surprises in the big bank results, with all the major players beating estimates and providing a cautious view of the macro backdrop.

Uncertainty about the big picture is a net negative for the earnings outlook, as the lack of visibility is expected to weigh on expectations, even in the absence of explicit management guidance.

United Air Lines (UAL - Free Report) didn’t follow Delta’s (DAL - Free Report) lead on the guidance front, but we wouldn’t be surprised if United’s guidance proves to be the exception this reporting cycle. The magnitude of uncertainty is so high that most management teams that already provide explicit guidance will likely either withdraw the outlook altogether or lower the bounds of their guided range.

We are starting to see this in the revisions trend, both for the current period (2025 Q2) as well as full-year 2025. The chart below shows how 2025 Q2 estimates have started coming down lately.

Image Source: Zacks Investment Research

The chart below shows expectations for 2025 Q1 in terms of what was achieved in the preceding four periods and what is currently expected for the next three quarters.

Image Source: Zacks Investment Research

The chart below shows the overall earnings picture on an annual basis.

Image Source: Zacks Investment Research

While estimates for this year have started coming down lately, there haven’t been a lot of changes to estimates for the next two years at this stage. It is reasonable to expect these estimates to be adjusted downward as the effects of slowing U.S. economic growth and tariffs begin to be reflected in diminished corporate profitability.

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