Making Sense of Current Earnings Expectations

This week’s quarterly reports from Nike NKE, Carnival CCL, and three other S&P 500 members for their respective fiscal quarters ending in August will get counted as part of our September-quarter tally. We have already seen such fiscal August-quarter results from 14 S&P 500 members, including results from Oracle, Adobe, FedEx, and others.

We will discuss current expectations for Nike and Carnival later in this note, but we will first review the aggregate Q3 expectations for the S&P 500 index as a whole.

The expectation is for Q3 earnings to increase by +5.3% from the same period last year on +6.1% higher revenues. This would follow earnings growth rates of +12.5% and +12.3% in 2025 Q2 and Q1, respectively.

In the unlikely event that actual Q3 earnings growth for the S&P 500 index turns out to be +5.3% as currently expected, this will be the lowest earnings growth pace for the index since the +4.4% growth rate in 2023 Q3.

Regular readers of our earnings commentary are familiar with us consistently flagging the favorable shift in the revisions trend that has been in place for the last few months. We have regularly featured how Q3 estimates moved higher after the start of the period, marking a shift from the trends observed in the first two quarters of the year.

The positive revisions trend has not been restricted to Q3 alone, as estimates for Q4 have also moved higher lately, as the chart below shows.

Since the start of July, Q4 estimates have increased for 7 of the 16 Zacks sectors, which include the Tech, Finance, and Energy sectors. Other sectors enjoying positive estimate revisions for Q4 include Retail, Utilities, Transportation, and Business Services.

While Q4 estimates for the remaining 11 sectors have been under pressure, the favorable revisions trend for the Tech and Finance sectors is more than enough to offset their effect on the aggregate trends at the index level, as these two sectors alone account for more than 50% of the index’s total earnings.

On the negative side, Q4 estimates remain under pressure for 8 of the 16 Zacks sectors, with the notable estimates pressure at the Consumer Discretionary, Medical, Autos, Industrial Products, and Construction sectors.

The Tech sector, which has been a standout growth driver in recent quarters, is expected to continue playing that role in the coming periods as well. For 2025 Q3, Tech sector earnings are expected to increase +12% on +12.7% higher revenues, with Q4 earnings currently expected to be up +8.7% on +11.4% revenue growth.

The chart below shows the Tech sector’s earnings and revenue growth picture on a quarterly basis, with expectations for 2025 Q3 contrasted with actual growth for the preceding two periods and expectations for the following three quarters.

Key Earnings Reports This week

We have more than 20 companies scheduled to report results this week, including five S&P 500 members. In addition to Nike and Carnival, notable companies reporting this week include Paychex, AutoZone, ConAgra, and others. ghg

Nike is expected to report $0.28 per share in earnings on $11 billion in revenues, representing year-over-year changes of -60% and -5%, respectively. While estimates have been stable lately, sentiment on the stock remains weak given expectations of an elongated recovery. The stock has gained some ground since the last quarterly release in late June, but still remains -8.4% down this year. Nike reports after the market’s close on Tuesday, September 30^th.

Carnival estimates have modestly moved up lately, with the cruise line operator expected to report $1.32 per share in earnings on $8.07 billion in revenues, representing year-over-year changes of +3.9% and+2.3%, respectively. Carnival shares have been standout performers lately, with the stock up +23.1% in the year-to-date period.

The Earnings Big Picture

The chart below shows current Q3 earnings and revenue growth expectations for the S&P 500 index in the context of the preceding 4 quarters and the coming three quarters.

The chart below shows the overall earnings picture on a calendar-year basis.

In terms of S&P 500 index ‘EPS’, these growth rates approximate to $258.12 for 2025 and $290.98 for 2026.

For a detailed view of the evolving earnings picture, please check out our weekly Earnings Trends report here >>>>What Will the Q3 Earnings Season Show?

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This article originally published on Zacks Investment Research (zacks.com).

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