The recent Costco COST and AutoZone AZO quarterly releases kick-started the 2025 Q1 earnings season. We have another four S&P 500 members on deck to report Q1 results this week, including Oracle ORCL on Monday, March 10th, and Adobe ADBE on Wednesday, March 12th.
The earnings reports from Costco and AutoZone, as well as this week’s reports from Oracle and Adobe, are for their respective fiscal quarters ending in February, which we and other research organizations count as part of the overall March-quarter, or Q1 tally. By the time the big banks come out with their quarterly results about a month from now, we will have such Q1 results from almost two dozen S&P 500 members.
Regular readers of our earnings commentary are familiar with our favorable view of corporate profitability. The growth pace has been steadily accelerating in recent quarters, with the preceding quarter’s +14.6% earnings growth rate (+17.3% on an ex-Energy basis) reaching its highest level in three years.
We believe these favorable growth trends will remain in place in the current and coming quarters, with the sectors contributing to the growth momentum expanding beyond the Tech core of the last couple of years.
We are mindful of the potential negative macroeconomic effects of policy uncertainty, which appears to have also started showing up in some of the sentiment measures. The guidance downgrades from several retailers in recent days, where they cited tariffs and other sources of uncertainty, could very well be an early sign of a downshift in the earnings picture. We have been experiencing a relatively elevated magnitude of negative revisions to estimates for the current period (2025 Q1) even before the more recent signs of weakness in data, as we will share here a little later.
The expectation is that Q1 earnings will be up +6.2% from the same period last year on +3.8% higher revenues, which would follow the +14.6% earnings growth on +5% revenue gains in the preceding period.
The chart below shows current earnings and revenue growth expectations for 2025 Q1 in the context of where growth has been over the preceding four quarters and what is currently expected for the following three quarters.
Image Source: Zacks Investment Research
The chart below shows how Q1 earnings growth expectations have evolved since the quarter got underway.
Image Source: Zacks Investment Research
As noted earlier, there have been more negative revisions to Q1 estimates since the start of January compared to the comparable periods of the preceding few quarters. Not only is the magnitude of negative revisions to Q1 estimates more pronounced relative to the last few quarters, but it is also more widespread.
Read More: Previewing the 2025 Q1 Earnings Season
