Q1 2025 Earnings Season: Resilience Beyond Tech
Executive Snapshot
The first-quarter earnings season is nearly complete, and the narrative is refreshingly broad-based. With 92% of the S&P 500 reported, blended year-on-year earnings growth stands at 13.6%, well above the five-year average of 11.3%. Fully 78% of companies beat EPS estimates and 62% beat on revenue. While generative-AI headlines still command attention, this quarter’s real leadership came from financials, consumer staples, industrials, and even pockets of transportation—proof that 2025’s market momentum is not a one-sector story.
Financials: Core Banking Strength Offsets NIM Pressure
JPMorgan Chase (JPM) posted 4% revenue growth to $18.3 bn on robust card income, even as net interest income (NII) cooled. Net income of $4.4 bn beat the Street by 6%. Regional lenders saw mixed fortunes, but fee-heavy franchises proved resilient as market volatility boosted trading and advisory desks.
- Revolving credit balances remain near record highs, helping large card issuers harvest double-digit interest income growth.
- Capital markets revived on the back of a reopening IPO pipeline.
- Risks: Treasury yields and deposit costs rising; 62 companies cited “uncertainty” around tariffs, regulation, and credit trends.
Consumer Staples & Big-Box Retail: Pricing Power Intact
Coca-Cola (KO) eked out a 6% organic-sales gain on 5% price/mix. Walmart (WMT) raised FY 2026 guidance on strength in private-label food and membership fees. Home Depot and Lowe’s reaffirmed outlooks despite weather-linked comp declines.
- Gross margins preserved through shelf-pricing and shrink-control.
- Labor market strength supports consumer volume.
Industrials & Aerospace: Deliveries Drive the Rebound
Boeing (BA) narrowed its loss to $0.49 per share as revenue rose 18%. Caterpillar (CAT) absorbed a 10% revenue dip thanks to backlog strength and capital deployment.
- Supply chains normalized, shortening lead times.
- Capex up-cycle supports order flow, though tariffs pose headwinds.
Transportation: Travel Boom Continues
Delta Air Lines (DAL) posted record Q1 revenue of $14 bn, led by premium and international bookings. Q2 EPS guidance was $1.70–$2.30 despite fuel cost concerns.
Energy & Utilities: Diverging Fortunes
Energy sector profits fell -14.2% Y/Y on lower crude averages, but majors like Exxon Mobil delivered $7.7 bn in profit via downstream strength.
Macro Forces Shaping the Quarter
- Tariffs: 411 companies mentioned “tariff(s)”—watch for cost-passthrough pressure in 2H.
- Rates: Fed pause anchored funding costs; futures imply 2 cuts by year-end.
- Consumer: Strong wages helped offset rising credit delinquencies.
- Geopolitics: Defense spending rose, airlines hedged fuel heavily.
Looking Ahead
- Guidance split: 36 raised EPS outlooks, 42 lowered.
- Forward P/E at 21.4 exceeds 10-year average (18.3), implying limited room for macro surprises.
- Key watchlist: energy for rebound, homebuilders for rate sensitivity, financials for credit trends.
Bottom Line: Q1 2025 shows a humming U.S. corporate engine. Breadth—not just tech—is powering resilience, but vigilance is warranted as policy and consumer forces evolve.
