S&P 500 Maintains Earnings Growth Streak in Q4 2025
The S&P 500 is navigating a mixed earnings season for the fourth quarter of 2025, with preliminary reports indicating a blended year-over-year earnings growth rate of approximately 8.2% to 8.3%. This performance extends the index's streak of consecutive quarterly earnings growth to ten quarters. Revenues for the S&P 500 are also showing strength, projected to have increased by 7.7% year-over-year, marking the 21st consecutive quarter of revenue expansion.
Earnings Surprises and Magnitude
As of January 22, 2026, with a portion of S&P 500 companies having reported actual results, approximately 79% have announced earnings per share (EPS) that surpassed mean estimates. An earlier report, covering 13% of companies, noted that 75% reported a positive EPS surprise and 69% reported a positive revenue surprise. However, the aggregate earnings reported by these early companies exceeded estimated earnings by 5.8%. This figure is below the five-year average surprise of 7.7%, indicating that while positive surprises are frequent, their magnitude is less pronounced compared to recent historical averages.
Sectoral Performance Highlights
The earnings landscape across the S&P 500 sectors presents a varied picture. Eight out of the eleven sectors are anticipated to record year-over-year earnings gains. The Information Technology sector stands out as a leading performer, projected to achieve a substantial 25.9% growth. Other sectors demonstrating solid growth include Materials with 9.0% and Financials with 6.4%. Conversely, some sectors are facing headwinds, with Consumer Discretionary expected to see a decline of -3.5%, followed by Energy at -1.7%, and Industrials at -0.5%. The Utilities sector is also expected to contribute positively with an estimated 4.6% growth rate.
Analyst Expectations and Market Valuation
Analyst sentiment leading into the Q4 2025 earnings season was generally positive, with 47% of S&P 500 companies issuing positive EPS guidance. This percentage, representing 50 out of 107 companies, is above both the 5-year average of 42% and the 10-year average of 40%. The current forward 12-month Price-to-Earnings (P/E) ratio for the S&P 500 stands at 22.1, which is higher than the 5-year average of 20.0 and the 10-year average of 18.8. This elevated valuation suggests that earnings durability remains a critical factor in supporting market prices.
5 Comments
Eugene Alta
A 22.1 P/E? That's overvalued. This market correction is overdue.
Noir Black
Analyst sentiment is positive, which is encouraging, but the fact that the earnings surprise magnitude is below average hints at a more cautious underlying reality. We're seeing growth, but maybe not as robust as it appears on the surface.
Katchuka
Fantastic news! Ten consecutive quarters of earnings growth shows incredible market strength.
Loubianka
Consumer Discretionary is down. People are spending less, which is a huge red flag.
Mariposa
It's great to see continued revenue expansion across the S&P 500, but the elevated P/E ratio is a concern for long-term investors. High valuations can make the market vulnerable to shocks.