In the first quarter of the year, there was a semi-V-shaped pattern in aggregate earnings, with earnings growth reaching a low point of -5.2% at the beginning of earnings season, then significantly improving to -0.7%. If the remaining companies report an aggregate earnings surprise of at least 5.6%, then Q1 growth rate could turn positive, which would be the first time since Q4 of 2020 where the index went from a negative growth rate at the start of earnings season to ending in positive territory.
Out of all the companies in the index, 63.2% reported both an earnings and revenue beat, while 9.5% reported both an earnings and revenue miss. The Materials sector saw the largest increase in net profit margin expectations this quarter, with an increase of 150 basis points, followed by Information Technology with 90 basis points, and Consumer Discretionary with 70 basis points. Looking at breadth, we can see that 48.9% of companies saw their net margin increase compared to the prior quarter, while 50.6% saw their net margin decrease. Additionally, 13.1% of companies saw their net margin increase for two consecutive quarters, and 3.6% saw their net margin increase for three consecutive quarters. On the other hand, 26.0% of companies saw their net margin decrease for two consecutive quarters, 11.2% saw their net margin decrease for three consecutive quarters, and 4.1% saw their net margin decrease for four consecutive quarters.