S&P 500 EPS TRACKER: 2Q25 Americas CIO View August 2025
Ju Wang
Equity Portfolio Manager
Tel. +1 (212) 454 8572
E-Mail: ju.wang@dws.com
David Bianco
Americas Chief Investment Officer
Tel. +1 (212) 454 8527
E-Mail: david.bianco@dws.com
For institutional use and registered representative use only. Not for public viewing or distribution.
2Q 2025 EARNINGS SEASON OBSERVATIONS
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▪ This data reflects the 478 S&P 500 companies or 97% of index earnings that have reported as of Wednesday Aug 27th.
▪ Bottom-up blended 2Q earnings per share (EPS) is $66.83 (actual results for companies reported and consensus estimates for the rest), +11.8% year-over-year
(y/y). Our estimate for 2Q was $64. Blended sales growth is +4.9% y/y. Blended pro-forma net margin is 13.3%, vs. 13.0% in 1Q25 and 12.4% a year ago.
▪ Bottom-up 2Q EPS y/y growth is 28.4% at the Great 8 (AAPL, AMZN, GOOG/GOOGL, META, MSFT, NFLX, NVDA, TSLA) and 7.4% at the S&P ex. the Great 8.
Bottom-up 2Q sales growth is 15.7% at the Great 8 and 3.6% at the S&P ex. the Great 8.
▪ S&P 500 ex the Great 8’s 2025 consensus EPS have been cut by 3.8% since 2025 start (cut by 8.7% since 2024 start). The Great 8’s 2025 consensus EPS have
been raised by 3.5% since 2025 start (raised by 21.6% since 2024 start).
▪ 77% of reporting companies beat on EPS and 18% missed (the rest in-line), with an aggregate surprise of +7.0%, +6.5% ex Financials. Historic average EPS beat
is +3.3% (2011-2019 average). 63% beat on sales and 15% missed, with an aggregate surprise of +2.6%, +2.5% ex Financials. Our measures of beat / miss ratios
and magnitudes are based on analysts’ consensus estimates at the end of the fiscal quarter for each company.
▪ Bottom-up consensus estimate for 2025 S&P EPS is now $269.50. Our estimate is $270 ($260=$63+$67+$68+$72), up 10% y/y. This assumes soft manufacturing
persists into 2025 and very strong EPS growth from Tech and Communications.
▪ By sector, 2Q blended EPS y/y growth is strongest at Communication Services (+48% y/y), Tech (23%), Financials (12%) and Health Care (8.3%, 19.2% at HC ex
Managed Care). EPS y/y growth is weakest at Energy (-19% y/y), Utilities (-1.9%), Materials (-0.8%), Consumer Staples (0.0%) and Real Estate (1.2%).
▪ 2Q blended sales y/y growth is strongest at Tech (+16% y/y), Health Care (11%), Communication Services (8.2%), Utilities (7.4%), Real Estate (7.2%) and
Materials (5.7%). Sales y/y growth is weakest at Energy (-5.9% y/y), Financials (-2.7%) and Consumer Staples (0.6%).
▪ Valuations are demanding at both the Great Eight and S&P 492, particularly relative to real interest rate. S&P 500 excluding the Great 8 price-to-earnings (P/E) on
2025 consensus EPS is 21.1x, PE of the Great 8 is 33.5x. PE of S&P excluding the Great 8 and Energy & Financials is 22.4x. Overall S&P PE is 24.3x.
▪ We see the Great 8 at risk to overly demanding PEs, we see the rest of the S&P 500 at risk to a cyclical downturn. In our view, both are at risk to higher Treasury
yields.
Source: DWS Investment GmbH as of 8/28/2025. For illustrative purposes only. Past performance is not a guarantee of future results. It is not possible to invest directly in an index.
Forecasts are not a reliable indicator of future returns. Forecasts are based on assumptions, estimates, views and hypothetical models or analyses, which might prove inaccurate or
incorrect. This information should not be construed as a recommendation of any specific security.
For institutional use and registered representative use only. Not for public viewing or distribution.
WHAT WE HEARD COMPANIES SAY THIS REPORTING SEASON ABOUT TARIFFS AND TAXES (PAGE 1/2)
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▪ META (Mark Zuckerberg): We are making all these investments because we have conviction that superintelligence is going to improve every aspect of what we do from a business
perspective.
▪ GM: This decline was primarily driven by a net tariff impact of $1.1 billion in the quarter. We benefited from lower fixed costs, improved mix, and foreign currency impacts which largely
offset the effect of lower volume, EV inventory adjustments, and higher warranty-related charges. Adjusted automotive free cash flow was $2.8 billion, down $2.5 billion year-over-year.
Excluding the impact of tariffs, our margin would have been approximately 9%, which underscores the fundamental strength of our business. The second quarter net impact of $1.1
billion was slightly lower than we had expected due to the timing of certain indirect tariff costs. As a result, we will likely see third quarter net tariff costs higher than in the second
quarter. For the full year, while there have been some puts and takes since we gave our initial guidance, our gross tariff impact remains unchanged at $4 billion to $5 billion this year
as we continue to produce and import vehicles from Canada, Mexico, and Korea to avoid interruptions for our customers and dealers. However, we're still tracking to offset at least
30% of the $4 billion to $5 billion full-year 2025 tariff impact through strategic actions such as manufacturing adjustments, targeted cost initiatives, and consistent pricing. Over time, we
remain confident that our total tariff expense will come down as bilateral trade deals emerge and our sourcing and production adjustments are implemented.
▪ PHM: Stable stick and brick costs at $79 per square foot. And we're certainly anticipating, a tariff load hitting our closings in next year. But we think for this year it's going to be minimal
and mostly in the back half of Q4.So, a little bit of the upside, a little bit of upside to our expectations from a quarter ago on that you can see the sequential lift in incentives.
▪ DHI: Incentives primarily driven by competitive FHA product offerings and rate buydowns like the 3.99% program. Gross margin pressure anticipated due to higher incentives despite
stable construction costs and broker commissions.
▪ CLF: We understand why the US has a 50% tariff on imported steel from Canada, and that's fine. We are keeping all Stelco steel in Canada and we are doing that by design since we
acquired Stelco in November of last year and not now as a result of the tariffs implemented into 2025. It's well-known that the United States is a net importer of steel. Other relevant
news in trade enforcement is the very important 50% tariff that will go into place on Brazilian pig iron starting August 1. Cleveland-Cliffs does not rely on imported pig iron at all. We
have our own hot briquetted iron facility in Toledo, Ohio but several of our EAF competitors do rely on imported pig iron.
▪ MMM: …and $25 million from tariff impact and stranded cost headwind. which was partially offset by $0.02 from FX and $0.06 from non-operational below-the-line items.
▪ NKE: With the new tariff rates in place today, we estimate a gross incremental cost increase to NIKE of approximately $1 billion. We intend to fully mitigate the impact of these
headwinds over time as we implement and annualize the actions I've outlined.
▪ AEP, ETR: Strong outlooks for load growth from regulated utilities American Electric Power (AEP) and Entergy (ETR) also supported the group. AEP disclosed plans to again raise the
5-year capital program by ~30% + now has agreements of incremental load of 24 GW by 2030 (previously 21 GW). In other words, AEP sees peak load increasing by >60% through
2030 to >60 GW (from 37 GW currently). And, beyond that, 190 GW in the interconnection queue (up from 180 GW). On the call, management said “demand for power is growing at
apace I have not seen in my 45-year energy career.”
Source: Companies’ earnings call transcripts, Factset, DWS Investment GmbH as of 8/28/2025. For illustrative purposes only. Past performance is not a guarantee of future results. It
is not possible to invest directly in an index. Forecasts are not a reliable indicator of future returns. Forecasts are based on assumptions, estimates, views and hypothetical models or
analyses, which might prove inaccurate or incorrect. This information should not be construed as a recommendation of any specific security.
For institutional use and registered representative use only. Not for public viewing or distribution.
WHAT WE HEARD COMPANIES SAY THIS REPORTING SEASON ABOUT TARIFFS AND TAXES (PAGE 2/2)
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▪ Verizon: OBBBA will reduce cash taxes and increase FCF by 10-12%.
▪ HSY: As it relates to tariffs, the $100 million that you cited unmitigated, does that assume that we, for cocoa in particular, does that assume we stay at that 10% paused tariff rate for –
you know some of the countries were a bit higher initially. So, does it – can you just clarify whether that would assume we stay at the 10% rate? Answer – Steve Voskuil – The Hershey
Co.: Yes, it does.
▪ KO: The dynamic tariff landscape could impact pockets of our system's cost structure as well as consumer sentiment in our markets. At this time, we believe we have numerous levers
to help manage the impact.
▪ BSX: So, then as we move into second half of the year, a couple of dynamics there, we'll see the tariff impact really take hold approximately $100 million (down from $200mm) which
predominantly impacts the second half of the year. And then we do anticipate continuing to reinvest back into the business to drive differentiated revenue growth for the near and long-
term. So, that's the focus of the company.
▪ PG: The company estimates a headwind of around $200M after-tax from unfavorable commodity costs and a net headwind of roughly $250M after-tax from modestly higher net
interest expense and its core effective tax rate. In addition, the company's outlook includes around $1B dollars before-tax, or ~$800M after-tax, in higher costs from tariffs. The
company said it expects a tailwind from foreign exchange rates of ~$300M dollars after-tax. Combined, the net of these impacts equates to a headwind of $0.39 per share for FY26, or
a six percent drag on core EPS growth. P&G said it expects a core effective tax rate to be in the range of 20% to 21% in FY26, at the mid-point of the range, approximately one point
higher than the FY25 level.
▪ WHR: Results from Whirpool included sales miss, particularly North America major domestic appliance sales down 5% y/y compared to 1% decline in industry shipments. BofA
analysts noted company has not benefitted from tariffs, citing inventory build before tariffs, foreign competitors willing to cut prices to hold market share.
▪ MRK: The $200 million of costs previously included in the Company’s financial outlook relatedto the impact of tariffs is unchanged pending the outcome of additional potential
government actions.
▪ ALLE: The company estimates tariff costs of approximately $40 million in 2025, which are included in the reported and organic revenue growth outlook. The company expects to offset
tariffs at the operating profit and EPS level on a full-year basis, primarily through pricing actions. Accordingly, the company’s 2025 full-year EPS outlook includes the impact from tariffs
Source: Companies’ earnings call transcripts, Factset, DWS Investment GmbH as of 8/28/2025. For illustrative purposes only. Past performance is not a guarantee of future results. It
is not possible to invest directly in an index. Forecasts are not a reliable indicator of future returns. Forecasts are based on assumptions, estimates, views and hypothetical models or
analyses, which might prove inaccurate or incorrect. This information should not be construed as a recommendation of any specific security.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 QUARTERLY EPS REVISION
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Source: Factset, DWS Investment GmbH as of 8/28/2025. For illustrative purposes only. Past performance is not a guarantee of future results. It is not possible to invest directly in an
index. Forecasts are not a reliable indicator of future returns. Forecasts are based on assumptions, estimates, views and hypothetical models or analyses, which might prove
inaccurate or incorrect.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 EPS REVISION
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Source: Factset, DWS Investment GmbH as of 8/28/2025. For illustrative purposes only. Past performance is not a guarantee of future results. It is not possible to invest directly in an
index. Forecasts are not a reliable indicator of future returns. Forecasts are based on assumptions, estimates, views and hypothetical models or analyses, which might prove inaccurate
or incorrect.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 AND THE GREAT 8 EPS REVISIONS
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The Great 8: AAPL, AMZN, GOOG/GOOGL, META, MSFT, NFLX, NVDA, TSLA.
Source: IBES, Factset, DWS Investment GmbH as of 8/28/2025. Past performance may not be indicative of future results. It is not possible to invest directly in an index. This
information should not be construed as a recommendation of any specific security. Forecasts are not a reliable indicator of future returns. Forecasts are based on assumptions,
estimates, views and hypothetical models or analyses, which might prove inaccurate or incorrect.
For institutional use and registered representative use only. Not for public viewing or distribution.
2Q 2025 EARNINGS SEASON SUMMARY STATISTICS
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Source: Factset, DWS Investment GmbH as of 8/28/2025. For illustrative purposes only. It is not possible to invest directly in an index. Past performance is not a guarantee of future
results.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 QUARTERLY EPS REVISION AND SURPRISE
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Source: Factset, DWS Investment GmbH as of 8/28/2025. For illustrative purposes only. It is not possible to invest directly in an index. Past performance is not a guarantee of future
results.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500: EPS CUT DURING THE CALENDAR QUARTER VS. EPS BEAT DURING EARNINGS SEASON
S&P 500 EPS GROWTH BY SECTOR
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2Q25 is blended with actual for reported and consensus for the rest
Note: Based on S&P 500 current index constituents compiled as of 9/30/2024.
Source: Factset, DWS Investment GmbH as of 8/28/2025. For illustrative purposes only. It is not possible to invest directly in an index. Past performance is not a guarantee of future
results.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 SALES GROWTH BY SECTOR
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2Q25 is blended with actual for reported and consensus for the rest
Note: Based on S&P 500 current index constituents compiled as of 9/30/2024.
Source: Factset, DWS Investment GmbH as of 8/28/2025 . For illustrative purposes only. It is not possible to invest directly in an index. Past performance is not a guarantee of future
results.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 NET MARGINS BY SECTOR
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2Q25 is blended with actual for reported and consensus for the rest
Note: Blue represents net margin expansion y/y, Orange represents net margin contraction y/y. Based on S&P 500 current index constituents compiled as of 9/30/2024.
Source: Factset, DWS Investment GmbH as of 8/28/2025. For illustrative purposes only. It is not possible to invest directly in an index. Past performance is not a guarantee of future
results.
S&P net margins surged to record high of 13.9% in 2021, led by digital firms, and consumer goods producers/retailers. We see some cyclical set-
backs in net margins. S&P 500 net margins are cyclical, but not mean reverting, they have been rising since mid-1990s for structural reasons.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 2025 EPS REVISION BY SECTOR
/ 13For institutional use and registered representative use only. Not for public viewing or distribution.
Source: Factset, DWS Investment GmbH as of 8/28/2025. For illustrative purposes only. Past performance is not a guarantee of future results. It is not possible to invest directly in an
index.
S&P 500 EPS AND SALES Y/Y GROWTH BY SECTOR
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- Great 8: AAPL, AMZN, GOOG/GOOGL, META, MSFT, NFLX, NVDA, TSLA
Source: Factset, DWS Investment GmbH as of 8/28/2025. For illustrative purposes only. It is not possible to invest directly in an index. Past performance is not a guarantee of future
results.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 BANKS LOAN LOSS PROVISIONS
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Source: Factset, DWS Investment GmbH as of 8/28/2025 . For illustrative purposes only. It is not possible to invest directly in an index. Past performance is not a guarantee of future
results.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 BANKS LOAN RESERVES AND CHARGE-OFFS
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Source: Factset, DWS Investment GmbH as of 8/28/2025. For illustrative purposes only. It is not possible to invest directly in an index. Past performance is not a guarantee of future
results.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 EPS MODEL
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S&P 500 EPS historical constituents represents the earnings per share (EPS) of S&P 500 index constituents at the time, while S&P 500 EPS current constituents represents the
earnings per share of index constituents as of the date the data was compiled 9/30/2024. FFO is used for REITs instead of EPS.
Source: Factset, DWS Investment GmbH as of 8/28/2025. Past performance may not be indicative of future results. It is not possible to invest directly in an index. Forecasts are not a
reliable indicator of future returns. Forecasts are based on assumptions, estimates, views and hypothetical models or analyses, which might prove inaccurate or incorrect. No
representation or warranty is made by DWS as to the reasonableness or completeness of the forward-looking statements or to any other financial information contained herein.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 SECTOR AND INDUSTRY ALLOCATION
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Great 8: AAPL, AMZN, GOOG/GOOGL, META, MSFT, NFLX, NVDA, TSLA
Source: Factset, DWS Investment GmbH as of 8/27/2025. Past performance may not be indicative of future results. It is not possible to invest directly in an index.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 SECTOR STRATEGY: PER KEY MACRO PLAYS
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Note: OW – Overweight; EQ – Equalweight; UW – Underweight.
Source: DWS Investment GmbH as of August 2025. It is not possible to invest directly in an index. Forecasts are not a reliable indicator of future returns. Forecasts are based on
assumptions, estimates, views and hypothetical models or analyses, which might prove inaccurate or incorrect. No representation or warranty is made by DWS as to the
reasonableness or completeness of the forward-looking statements or to any other financial information contained herein.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 FAIR VALUE BY SECTOR
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Source: IBES, DWS Investment GmbH as of 8/27/2025. Past performance may not be indicative of future results. It is not possible to invest directly in an index. No representation or
warranty is made by DWS as to the reasonableness or completeness of the forward-looking statements or to any other financial information contained herein.
S&P 500 EPS historical constituents represents the earnings per share (EPS) of S&P 500 index constituents at the time, while S&P 500 EPS current constituents represents the
earnings per share of index constituents as of the date the data was compiled 9/30/2024.
The estimated 2024 year-end upside is on absolute valuation basis of each sector, not on relative sector valuation basis. Forecasts are not a reliable indicator of future returns.
Forecasts are based on assumptions, estimates, views and hypothetical models or analyses, which might prove inaccurate or incorrect.
Assuming a ~5.25% real cost of equity (CoE) for overall S&P 500
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 INTRINSIC VALUATION MODEL
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Source: DWS Investment Management GmbH as of August 2025. It is not possible to invest directly in an index. Forecasts are not a reliable indicator of future returns. Forecasts are based on assumptions,
estimates, views and hypothetical models or analyses, which might prove inaccurate or incorrect. No representation or warranty is made by DWS as to the reasonableness or completeness of the forward-
looking statements or to any other financial information contained herein. For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 PRICE-TO-EARNINGS (P/E) RATIO
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Note: NTM – next twelve month. Forward PE is the price dividend by consensus next twelve-month EPS.
Source: Factset, DWS Investment GmbH as of 7/31/2025. It is not possible to invest directly in an index. Past performance is not a guarantee of future results. Forecasts are based on
assumptions, estimates, views and hypothetical models or analyses, which might prove inaccurate or incorrect. No representation or warranty is made by DWS as to the
reasonableness or completeness of the forward-looking statements or to any other financial information contained herein.
S&P 500, TECH AND HEALTH CARE FORWARD PE S&P 500 EX TECH ENERGY & FINANCIALS FORWARD PE
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 AND TECH SECTOR GROWTH PREMIUM
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Note: lhs – left hand side; rhs – right hand side. ERP – equity risk premium.
Source: IBES, Haver, DWS Investment GmbH as of 2Q2025. It is not possible to invest directly in an index. Past performance is not a guarantee of future results.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 AND THE GREAT 8 TOTAL RETURN
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Great 8: AAPL, AMZN, GOOG/GOOGL, META, MSFT, NFLX, NVDA, TSLA
Source: IBES, Factset, DWS Investment GmbH as of 8/27/2025. Past performance may not be indicative of future results. It is not possible to invest directly in an index. Any mentions
of specific properties or securities are for illustrative purposes only and should not be considered as recommendations.
For institutional use and registered representative use only. Not for public viewing or distribution.
S&P 500 AND THE GREAT 8 P/E RATIO
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The Great 8: AAPL, AMZN, GOOG/GOOGL, META, MSFT, NFLX, NVDA, TSLA
Source: IBES, Factset, DWS Investment GmbH as of 8/27/2025. Past performance may not be indicative of future results. It is not possible to invest directly in an index. Any mentions
of specific properties or securities are for illustrative purposes only and should not be considered as recommendations.
For institutional use and registered representative use only. Not for public viewing or distribution.
GLOSSARY
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Amortization is an accounting term which refers to the periodical reduction of the book value of intangible assets (such as patents) or bank loans.
Bottom-up is an approach which focuses on approaching a problem through the smallest elements (e.g. individual corporate results).
Capital expenditure (Capex) are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment.
Cyclical is something that moves with the cycle.
Depreciation refers to an accounting method used to allocate the cost of a tangible or physical asset over its useful life. Depreciation represents how much of an
asset's value has been used. It allows companies to earn revenue from the assets they own by paying for them over a certain period of time.
Dividend per share (DPS) is the sum of declared dividends issued by a company for every ordinary share outstanding.
Earnings per share (EPS) is calculated as a company's net income minus dividends of preferred stock, all divided by the total number of shares outstanding.
EBITDA (earnings, before interest expenses, taxes, depreciation and amortization) is an accounting measure calculated using a company's net earnings, before
interest expenses, taxes, depreciation and amortization are subtracted.
Generally accepted accounting principles, or GAAP, are a set of rules that encompass the details, complexities, and legalities of business and corporate accounting.
Leverage attempts to boost gains when investing through the use of borrowing to purchase assets.
Mean reversion is a theory that prices and returns eventually move back toward the mean, or average.
Operating Cash Flow is an accounting term that measures the amount of cash generated by a company through its usual business activities.
Price-to-book (P/B) ratio or multiple compares a stock's market value with its book value.
The price-to-earnings (P/E) ratio compares a company's current share price to its earnings per share.
Pro forma financials are not computed using generally accepted accounting principles (GAAP) and usually leave out one-time expenses that are not part of normal
company operations, such as restructuring costs following a merger.
Profit Margin, or net margin is an accounting figure which describes profit in relation to revenue in percent.
A recession is, technically, when an economy contracts for two successive quarters but is often used in a looser way to indicate declining output.
The risk premium is the expected return on an investment minus the return that would be earned on a risk-free investment.
The S&P 500 is an index that includes 500 leading U.S. companies capturing approximately 80% coverage of available U.S. market capitalization.
A share buyback involves a company buying back its own shares.
Stagflation is the combination of the words "stagnation" and "inflation," referring to a period where inflation is high while the economy is stagnating.
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IMPORTANT INFORMATION
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The comments, opinions and estimates contained herein are based on or derived from publicly available information from sources that we believe to
be reliable. We do not guarantee their accuracy. This material is for informational purposes only and sets forth our views as of date of this
presentation and it is not intended to be a solicitation or recommendation. The underlying assumptions and these views are subject to change
without notice.
War, terrorism, sanctions, economic uncertainty, trade disputes, public health crises and related geopolitical events have led, and, in the future, may
lead to significant disruptions in US and world economies and markets, which may lead to increased market volatility and may have significant
adverse effects on investments.
Past performance is not indicative of future returns.
Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index.
Forecasts are not a reliable indicator of future returns. Forecasts are based on assumptions, estimates, views and hypothetical models or analyses,
which might prove inaccurate or incorrect.
Any mentions of specific securities are for illustrative purposes only and should not be considered a recommendation.
All investments involve risks, including potential loss of principal.
The brand DWS represents DWS Group GmbH & Co. KGaA and any of its subsidiaries such as DWS Distributors, Inc. which offers investment
products or DWS Investment Management Americas Inc. and RREEF America L.L.C. which offer advisory services, in addition to the regional
entities in the DWS Group.
© 2025 DWS Group GmbH & Co. KGaA. All rights reserved. I- 107211_1 (8/25)
For institutional use and registered representative use only. Not for public viewing or distribution.