Consumer industries are seeing growth and margin expansion in Q3 Consumer industries are seeing growth and margin expansion in Q3 Consumer industries are seeing growth and margin expansion in Q3

Consumer industries are seeing growth and margin expansion in Q3

Peter Garnry

Chief Investment Strategist

Summary:  The Q3 earnings season is well over half done and some clear signs are emerging. Financials and consumer oriented industries are the winners in terms of revenue growth and consumer industries have even been able to expand their operating margin from a year ago. The margin compression is the big theme in Q3 as companies are facing unprecedented wage pressures and for some industries the materials cost is still high. Margin pressure has been the highest among semiconductors and media companies. While energy companies are still doing great in terms of price performance their fundamentals have deteriorated slightly in Q3.

Analysts were too optimistic on Q3 earnings

The earnings season in S&P 500 is now 60% completed and a more clear picture is emerging. The EPS estimate on S&P 500 in Q3 has proven to have been too optimistic as the chart below indicates as earnings have rolled over in Q3 due to margin compression with technology companies being the hardest hit on margins. If we turn to geography the biggest hit to earnings has been in China followed by Europe. In the US equity market, the technology sector (Nasdaq 100) has been hit harder than the general S&P 500. Our expectation is that margin compression will continue for some quarters as net profit margin remains above the historical average and Atlanta Fed Wage Growth Tracker Median remains above 6% y/y.

Diversified financials and consumer companies are the winners in Q3

If we dig deeper into the 24 industry groups we see that consumer oriented industries such as consumer durables & apparel and household & personal products have seen the highest revenue growth q/q except for the winner diversified financials up 9.9% q/q. Diversified financials is a diverse industry group that has benefitted from higher market volatility leading to more trading activity and Berkshire Hathaway’s physical businesses have also seen healthy revenue growth. The list below highlights the 10 largest diversified financials in the world.

  • Berkshire Hathaway
  • Charles Schwab
  • Morgan Stanley
  • Goldman Sachs
  • American Express
  • Blackstone
  • S&P Global
  • BlackRock
  • Brookfield Asset Management
  • CME Group

The household & personal products industry group is interest because the group has seen a 254 bps. jump in its EBIT margin suggesting strong qualities amid inflation and input cost pressures which is something investors are willing to pay a high price for going forward. The list below highlights the 10 largest household & personal products companies in the world.

  • Procter & Gamble
  • L’Oreal
  • Unilever
  • Estee Lauder
  • Colgate-Palmolive
  • Reckitt Benckiser
  • Kimberly-Clark
  • Haleon
  • Henkel
  • Beierdorf

The two biggest losers in Q3 in terms of margin compression are semiconductors and media & entertainment with a 414 bps. and 508 bps. EBIT margin reduction q/q respectively. The media & entertainment industry group is significantly impacted by the excessive spending by Meta on its metaverse bet covered in our equity note last week.

Energy is still the momentum leader

While energy companies have seen a decline in revenue q/q in Q3 and slightly lower EBIT margin, the industry group is still standing out as by far the best performing industry group; in fact, the only industry group to be up in USD terms over the past 12 months. Being overweight was the most decisive decision to be made by investors over a year ago. In fact, the only true inflation hedge together with commodity futures. Everything else from crypto to real estate have proven useless as an inflation hedge. Media led by weakness at Alphabet, Netflix, Disney, and Meta is by far the worst performer over the past 12 months and the bad performance has continued over the past month.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.