Zacks Earnings Trends Highlights: United Air Lines, A.O. Smith and 3M

For Immediate Release

Chicago, IL – May 1, 2025 – Zacks Director of Research Sheraz Mian says, "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 uncertain macroeconomic backdrop."

Earnings Expectations Shift Lower: A Closer Look

Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>

Here are the key points:

• Total Q1 earnings for the 256 S&P 500 members that have reported results are up +14.0% from the same period last year on +4.0% higher revenues, with 72.3% beating EPS estimates and 62.1% 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 uncertain macroeconomic backdrop. This is starting to show up in declining estimates for the coming periods.
• For 2025 Q2, total S&P 500 earnings are expected to be up +7.0% from the same period last year on +3.8% higher revenues. Estimates for the period have been coming down in a notable way, which aligns with the negative trend we experienced before the start of the Q1 earnings season.
• Estimates for full-year 2025 have also been coming down meaningfully in recent weeks, particularly since about mid-February, with estimates for 14 of the 16 Zacks sectors getting cut. Sectors suffering the most significant cuts include Energy, Tech, Finance, and Medical. Estimates have moved up for the Construction and Aerospace sectors.

Earnings Outlook Weakens

Uncertainty about the overall macroeconomic picture continues to be a significant drag on the earnings outlook as a whole, prompting analysts to cut their estimates for the current and coming periods.

This uncertain environment makes it difficult for companies to provide explicit guidance for the coming periods. We had noted here how United Air Lines UAL had provided a two-pronged outlook, with one guidance a reiteration of their existing outlook and the second describing the earnings impact of a recessionary backdrop.

Since then, A.O. Smith AOS and 3M MMM followed United Air Lines’ lead by reiterating its outlook for the year, but 3M also provided a tariffs component that will potentially weigh on full-year EPS in the -2.5% to -5% range. A.O. Smith appears to have used price increases to offset the potential tariff impact that allowed it to maintain existing guidance. Many others have struggled with providing explicit guidance, for understandable reasons.

We are starting to see this in the revisions trend both for the current period (2025 Q2) and full-year 2025.

The emerging negative revisions trend appears to be broad-based, with Aerospace and Construction as the only sectors experiencing modest positive revisions.

Of the sectors suffering negative estimate revisions, the case of the Tech sector is particularly significant as this sector had thus far been enjoying a very favorable revisions trend for more than a year now.

For 2025 Q2, the Tech sector is currently expected to bring in +11.7% more earnings relative to the same period last year. This growth expectation is down from +14.2% on April 2^nd. For full-year 2025, the expectation is for sector earnings to increase by +11.3% from the 2024 level, a decline from the +12.1% growth expected on April 2^nd. We should note, however, that estimates have modestly inched up again over the past few days.

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.

Given all-around worries about the economy’s growth momentum, it is reasonable to expect these estimates to be lowered further in the days ahead as the tariffs impact starts showing up in data. The modestly negative GDP read for the first quarter of the year primarily reflected the anticipatory effects of the trade regime, with importers stocking up on supplies ahead of the new levies taking effect.

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.

See Stocks Free >>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

[email protected]

https://www.zacks.com

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research