The sectors expected to see an earnings surprise for annual net income in 2024 exceeding market expectations are IT and finance. Conversely, the communication and industrial sectors had a high possibility of an earnings shock.
According to NH Investment & Securities on the 8th, the overall annual net income growth rate for listed companies in 2024 is estimated to be 78.5%, forming a consensus (average forecast by securities firms). However, it has been measured that this may have been overestimated by 2.4 percentage points.
NH Investment & Securities used the Adaptive Uncertainty Curve adjusted Iterated Mean Combination (AUC-IMC) model to adjust for bias in the consensus values, improving the accuracy of predictions for annual earnings per share (EPS) and annual book value per share (BPS). This allows for measuring how much the estimates have been over (or underestimated) compared to the actual values.
The sectors with the highest annual net income growth rate in 2024 are IT, industrials, and communication, while those with lower rates (excluding losses) are materials, healthcare, and consumer discretionary. According to model estimates, IT and finance have a high possibility of an earnings surprise, while communication and industrials have a high possibility of an earnings shock.
In the IT sector, the potential for earnings surprise is deemed high for software, services, as well as semiconductors and semiconductor equipment. In the finance sector, an earnings surprise is anticipated for banks and securities. For industrials, transportation is expected to see an earnings surprise; however, capital goods are anticipated to experience an earnings shock. Communication services are expected to face earnings shocks across the sector.
The domestic consensus projected an annual net income growth rate of 19.6% for 2025, which is a downward revision of 6 percentage points compared to early 2024 estimates. The model forecasts that 2025 net income will be at a level similar to 2024, but considering the likelihood of excessive model adjustments at the beginning of the year, it is believed that income growth will gradually shift as the year progresses.
Among the sectors, the growth rate for utilities and communication services was substantial, and some underestimations were measured, indicating that performance is expected to be positive. For IT and industrials, a possibility of overestimation was indicated, and performance is expected to be weak.