You know an S&P 500 company is growing like crazy when even the bullish Wall Street analysts can't keep up.
Seven stocks in the S&P 500, including Nvidia, Digital Realty Trust and American Tower, are all expected to boost adjusted profit per share this calendar year by at least 30%, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge.
What's more these companies are blowing away profit forecasts so easily analysts just in the past month cranked up their profit forecasts for the year by 10% or more. And that kind of upgrading of expectations is impressing investors.
"Companies raising forward earnings or sales guidance are rallying more than usual in 2024, averaging a one-day share price gain of 6.1% compared to a one-day gain of 4.0% when looking back ten years," Bespoke Investment Group said. "Stocks lowering guidance have averaged a one-day drop of 5.3% so far in 2024 compared to a 10-year average of -5.4%."
Gearing Up For Growth
The S&P 500 is up big this year. And there's one reason why that's not causing alarm: profit is seen jumping this year, too.
Analysts think all companies in the S&P 500, collectively, will post 11% higher profit in 2024 than they did in 2023, says John Butters of FactSet. That's a significant acceleration from the S&P 500's anemic 0.9% earnings growth in 2023.
But some companies are likely to do much better than that, still.
Nvidia Takes Off
This one isn't a surprise: Nvidia's growth is decimating all forecasts. The company's profit this calendar year is seen rising nearly 90% to 24.59 a share. But what's just as head-turning is how much analysts have upped their estimates for the year. They've boosted their earnings forecast by nearly 21% in just a month's time.
But here's a surprise. An S&P 500 company in the real estate sector is expected to boost earnings this year by almost as much as Nvidia. Profit at Digital Realty Trust is seen rising 89.5% this year. And that's 20% higher than analysts thought just a month ago.
What About The Other Magnificent Seven?
Others in the Magnificent Seven are also growing faster than Wall Street can revise estimates. Amazon.com, for instance, is projected to boost earnings by nearly 45% this year. And analysts upped forecasts by nearly 17% in a month.
Then there's Meta Platforms. Analysts, impressed by the company's dominance in social media, boosted estimates for profit this year by more than 14% in a month. Now Wall Street thinks the company's profit will grow 34% this year.
To be sure, these are all just estimates. And analysts might change their minds on these stocks or others this year. But for now, analysts are scrambling just to keep up.
Blowing Past Expectations
Analysts upped 2024 EPS forecasts by 10% or more in a month on fast-growing firms
| Company | Ticker | Boost in 2024 EPS estimate (from one month ago) | 2024 EPS % growth expected |
|---|---|---|---|
| Nvidia | 20.5% | 89.8% | |
| Digital Realty Trust | 20.0% | 89.5% | |
| American Tower | 49.9% | 83.9% | |
| Amazon.com | 16.5% | 44.6% | |
| Constellation Energy | 15.9% | 39.0% | |
| Meta Platforms | 14.1% | 34.3% | |
| Illumina | 20.7% | 33.8% |
