第四季度收益观察：增长持续扩大

not only strengthened to a solid 14% but also broadened meaningfullybeyond mega-cap growth (MCG1) & Tech (Q3 Earnings Takes: Stronger andBroader, Nov 4 2025). The Q4 earnings season has continued the trend. nOverall earnings growth nudged higher to a 4-year high (14.5%), i.e., thehighest since the reopening boom, and the number of sectors with positive Karthik PrabhuStrategist growth rose again to 8 out of 11, up from 6 in Q3. Nearly half the companiesgrew at double-digit rates, with the median growth rate close to 10%, also thehighest in 4 years. Notably, the broadening in earnings has not been at theexpense of MCG & Tech which grew at 28% you, handily leading the pack,while growth for the rest sustained just under 7%. Dag WorkayehuStrategist than is historically typical for the next quarter’s estimates. 2026 consensuswent up, largely on the back of upgrades for MCG & Tech. off even as other sectors and the average stock rallied handily amidst theongoing rotation that began in late October. As we wrote last week, Tech hitthe bottom of its decade-long outperformance channel versus the rest of theS&P 500 before bouncing on Friday (Tech Bounces Off The Bottom Of The The Q3 earnings season had marked the first time in over 2 years that growth notonly strengthened to a solid 14% but also broadened meaningfully beyond mega-cap growth (MCG) & Tech (Q3 Earnings Takes: Stronger and Broader, Nov 4 2025). nBeats remain well above average.The proportion of companies beating onearnings (81% vs historical average of 74%) and the size of the aggregatebeat (6.5% vs 4.9% historically) both declined modestly in Q4 but remainedwell above their historical averages. The earnings beat by the mediancompany, however, fell back to its historical average (3.5%) after staying lower from the very elevated levels of the past 2 quarters, but continue to bewell above average. Margin beats also slowed slightly but remained above nModest pickup in earnings growth takes it to the highest in 4 years (from14.2% you in Q3 to 14.5% in Q4).Earnings growth you picked up slightlyfrom Q3 to Q4 but by enough to take it to the highest since the pandemicreopening boom in 2021. Notably, the hurdle for the quarter was quite high,as growth had been strong in Q4 of 2024 (13.5%). For the median company,growth is on track to hit almost 10%, also the highest in 4 years.Sequentially, Q4 followed two quarters which had seen the level of earningsrise by an outsized 11% (adjusted for seasonality, not annualized), taking it Growth continues to broaden across sectors.8 of the 11 sectorsin the S&P 500 have reported positive year-on-year earnings growthin Q4 2025, up from 6 in Q3 and just 2 in Q2. Mega-cap Growth (MCG) & Tech growth still very strong (28%).The broadening of growth is not happening at the expense of MCG & Tech which again led with very strong growth (29% in Q3 to 28%inQ4),the 10th straight quarter above 25%.There are nocomparable periods of such sustained steady high growth rates forthe group. In the 2H of the 1990s, their growth was arguably nGrowth outside of MCG & Tech is solid (6.4%).Earnings growth forthe S&P 500 outside MCG & Tech went largely sideways (6.7% in Q3to 6.4% in Q4), near a 3-year high. The standout this quarter wasMaterials (8% to 30%) which posted the highest growth acrosssectors as earnings rose sharply on rising commodity prices.Growth for the Financials slowed from the very high levels in Q3 butremained strong (26% to 14%). Utilities (8% to 9%) saw growthagain in the high single digits while growth for Industrial Cyclicals, Nearly half the companies are reporting double-digit growth.Theproportion of S&P 500 companies reporting double-digit growthhas risen from 40% in Q2 to 45% in Q3 and now 48% in Q4. Morethan a quarter of companies have growth above 20%. nGrowthis strong even after stripping out outliers.Growthcontinued to be broad based across sectors even after taking outthe top and bottom 5% of the contributors to earnings growth. Infact, after stripping out the outliers the number of sectors reportingpositive growth rises to 9 out of 11. Across sectors, outliers areclearly boosting growth for Materials, but hurting Consumer Consumer-facing goods companies continue to be the laggards.Earnings for Tech companies, both consumer and business facing, continued to see solid growth. Outside Tech, consumer-facingcompaniesfared worse than business-facing companies andgoods worse than services companies. Consumer-facing goods nGrowth for mid- and small-caps also picking up.Earnings growthcontinued to broaden beyond the large caps with mid- and small-cap (S&P 1000) growth up from 4.0% yoy in Q3 to 8.0% in Q4, thehighest in over 3 years. Earnings growth for the mid- and small-capshas continued to be in line with growth for the S&P 500 excluding Next quarter consensus cut more modestly than is typical and 2026consensus raised. The cut to Q1 consensus (-0.6%) is more modest than is typical(-1.4%).The S&P 500 bottom