Key Points-
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It seems likely that recent earnings show mixed results, with Health Care and Information Technology sectors outperforming.
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Research suggests companies like Pfizer and Merck in Health Care, and Amazon and Alphabet in Information Technology, may beat expectations based on sector trends.
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The evidence leans toward a trend of earnings beats in Health Care and Information Technology, potentially indicating broader market resilience.
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Earnings Summary
Recent earnings reports from show a mixed start for the S&P 500, with only 18% of companies reporting so far. Despite a weaker-than-average start and despite the turmoil of Trump’s first 100 days, year-over-year earnings growth continues for the seventh consecutive quarter, driven by strong performances in Health Care and Information Technology sectors.
Sector Trends
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Health Care: Companies like Johnson & Johnson and UnitedHealth Group beat expectations, suggesting resilience.
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Information Technology: Strong results from reported companies indicate potential for further beats.
Potential Turnaround Stories
Companies like Pfizer (May 7), Merck (April 24), Amazon (May 1), and Alphabet (April 24) in these sectors haven’t reported yet but may follow the positive trend, offering potential investment opportunities.
Detailed Analysis of Recent Earnings Reports and Trends
This note provides a comprehensive analysis of earnings reports from the past two weeks (April 14 to April 23) for S&P 500 companies, summarizing key findings and identifying emerging trends, particularly in sectors where companies are beating expectations. It also highlights companies that have not yet reported but may follow similar patterns, offering potential turnaround opportunities based on sector performance.
Context and Methodology
The current date is April 24, 2025, at 07:44 AM EDT, and the analysis focuses on earnings reports released from April 14 to April 23, 2025. The goal is to summarize recent earnings, identify sector trends, especially where beats are occurring, and predict potential outperformers among companies yet to report, aligning with the our interest in turnaround stories.
To gather data, I reviewed financial websites and earnings calendars, focusing on S&P 500 companies due to their broad market representation. Key sources included FactSet for sector performance and individual company earnings reports from MarketBeat, Yahoo Finance, and other platforms.
Summary of Recent Earnings Reports (April 14–23, 2025)
As of April 17, 2025, the S&P 500 earnings season for Q1 2025 was off to a weaker start than average, with only 12% of companies having reported. Despite this, the index reported year-over-year earnings growth for the seventh consecutive quarter, indicating underlying market strength. Below are highlights of key reports within the timeframe:
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Johnson & Johnson (JNJ):
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Reported on April 15, 2025.
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Q1 2025 EPS was $4.54 (including special items) and adjusted EPS of $2.77, both beating expectations.
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Sales grew 2.4% to $21.9 billion, with operational growth of 4.2% and adjusted operational growth of 3.3%.
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Raised full-year 2025 sales guidance, reflecting strong pipeline progress, including TREMFYA approval for Crohn’s disease (Johnson & Johnson Q1 2025 Earnings Report).
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UnitedHealth Group (UNH):
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Reported on April 17, 2025.
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Q1 2025 EPS was $6.85 (including special items) and adjusted EPS of $7.20, both above expectations. This did not stop the stock from falling and Phil considers it a great bargain at $428.31.
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Revenues of $109.6 billion grew $9.8 billion year-over-year, with consumer growth by 780,000.
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Revised full-year 2025 guidance downward due to higher medical costs, but still showed strong operational growth (UnitedHealth Group Q1 2025 Earnings Report).
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These reports indicate earnings resilience in the Health Care sector, with both companies beating EPS and revenue estimates, despite some guidance adjustments.
Sector Performance and Trends
The FactSet update from April 17, 2025, provides a detailed breakdown of sector performance, which is crucial for identifying trends:
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Metric
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Q1 2025 Value
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5-Year Avg
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10-Year Avg
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Notes
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|---|---|---|---|---|
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% S&P 500 Companies Reported
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12%
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–
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–
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–
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% Reporting Positive EPS Surprises
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71%
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77%
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75%
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Below averages
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Aggregate EPS Surprise
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6.1% above est.
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8.8%
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6.9%
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Below averages
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Blended Earnings Growth Rate
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7.2%
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–
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–
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Compared to 7.1% last week, 7.2% at Q1 end; 7th consecutive quarter of YoY growth
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Sectors with YoY Earnings Growth
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7 of 11
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–
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–
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Led by Health Care, Information Technology, Utilities
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Sectors with YoY Earnings Decline
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4 of 11
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–
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–
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Led by Energy, Materials, Consumer Staples
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% Reporting Positive Revenue Surprises
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61%
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69%
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64%
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Below averages
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Aggregate Revenue Surprise
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0.5% above est.
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2.1%
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1.4%
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Below averages
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Blended Revenue Growth Rate
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4.3%
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–
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–
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Compared to 4.3% last week, 4.4% at Q1 end; 18th consecutive quarter of growth
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Sectors with YoY Revenue Growth
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10 of 11
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–
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–
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Led by Information Technology, Health Care
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Sectors with YoY Revenue Decline
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1 of 11
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–
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–
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Industrials sector
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Forward 12-Month P/E Ratio
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19.0
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19.9
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18.3
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Below 5-year avg, above 10-year avg, compared to 20.2 at Q1 end (March 31)
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Health Care: Led year-over-year earnings growth, with JNJ and UNH beating expectations, suggesting sector resilience amid tariff pressures and healthcare demand.
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Information Technology: Also strong, with reported companies showing positive surprises, driven by AI and cloud computing growth.
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Declining Sectors: Energy, Materials, and Consumer Staples faced challenges, more due to macroeconomic factors like tariffs and inflation than operational issues.
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The trend of beats in Health Care and Information Technology is notable, with 71% of reporting companies surpassing EPS estimates, though below the 5-year average of 77%.
Companies Yet to Report and Potential Turnaround Stories
Given the positive trends in Health Care and Information Technology, I identified companies in these sectors that have not yet reported Q1 2025 earnings as of April 23, 2025, and may follow similar patterns:
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Health Care:
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Pfizer (PFE $22.51): Scheduled to report on April 29. The sector’s strength, with JNJ and UNH beating estimates, suggests PFE could follow suit, especially given its cost-saving initiatives and oncology pipeline (Pfizer Earnings Calendar).
- Phil’s Trade Idea: 20 2027 $18 ($5)/23 ($2.50) bull call spread are $2.50 ($5,000) and will make $2.50 (100%) if PFE is over $23 in Jan 2027 but the net delta on the spread is 0.20 but will quickly expend to 0.34 which means we can anticipate a fairly quick 0.50 ($1,000) gain (20%) if PFE moves up 10% to $25 after earnings.
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Merck (MRK $79.40): Scheduled to report on April 24. Analysts expect EPS of $2.16, up 4.4% YoY, and its position in the outperforming Health Care sector makes it a candidate for a beat (Merck Earnings Calendar).
- Phil’s Trade Idea: 10 August $85 calls are $3.60 ($3,600) with a 0.38 delta so a $5 bump in MRK post-earnings should return approximately $2 ($2,000 or 55%) while the placement of the short calls behind the next earnings report should maintain a high premium – even if they miss.
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Information Technology:
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Amazon (AMZN $181.11): Scheduled to report on May 1. The sector’s strong performance, driven by cloud and e-commerce growth, suggests Amazon could beat expectations, especially with AWS investments (Amazon Earnings Calendar).
- Phil’s Trade Idea: Amazon is trading at 24 times forward earnings vs a historical 30 times and their PEG ratio is an astounding 1.75. 5 2027 $160 ($49.50)/220 ($22.50) bull call spreads are $27 ($13,500) and you can promise to buy 300 shares of AMZN at $200 ($60,000) by selling the 2027 $200 puts for $37 ($11,100) to drop the net of the spread to $2,400 with an upside potential at $220 of $27,600 (1,150%).
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Alphabet (GOOGL $155.18): Scheduled to report on April 24. Analysts forecast EPS of $2.01, up 6.4% YoY, and its leadership in search and cloud aligns with sector trends (Alphabet Earnings Calendar).
- Phil’s Trade Idea: 20 August $190 calls at $2.50 ($5,000) have a 0.14 delta and should hold their premium as they are behind the next earnings. The August $175 calls are $5.60 so there should be a 100% gain ($5,000) if GOOGL makes a 10% gain post-earnings.
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These companies operate in sectors with positive momentum, making them potential turnaround stories if they beat expectations or provide strong guidance.
Detailed Observations and Implications
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Health Care Sector: The sector’s outperformance is driven by innovation (e.g., JNJ’s TREMFYA approval) and steady demand, despite tariff-related cost pressures. Pfizer and Merck, with strong pipelines, could capitalize on this trend.
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Information Technology Sector: AI and cloud computing are key drivers, with Amazon and Alphabet likely to benefit from increased digital adoption. Their upcoming reports could reinforce sector strength.
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Risks and Uncertainties: While sectors show promise, individual company performance depends on specific factors like supply chain disruptions or tariff impacts, which could affect outcomes.
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This analysis leverages the most recent data available as of April 23, 2025, and focuses on identifying actionable insights for investors. Always conduct further due diligence before making investment decisions.
For a more detailed report on earnings season to date, see Anya’s:
