By Wayne Duggan
About 90% of S&P 500 companies have reported 2nd-quarter earnings, and many of them have issued 3rd-quarter guidance or updated full-year guidance numbers as well. It’s been another strong quarter for U.S. companies up to this point. Here’s a rundown of the earnings season so far.
So far this season, 87% of S&P 500 companies have reported earnings numbers ahead of analyst expectations. That same percentage of companies have also reported revenue beats in the 2nd quarter.
That 87% earnings beat number is well above the 75% earnings beat average over the past 5 years and would mark the highest percentage of S&P 500 earnings beats in a single quarter going back to at least 2008.
But it isn’t just the percentage of earnings beats that is impressive. On average, companies are reporting earnings that are 17.1% above consensus analyst estimates, more than double the 5-year average earnings beat of 7.8%.
Overall, S&P 500 earnings are up 88.8% compared to pandemic levels 1 year ago. Revenue growth so far is 24.7%. Net profit margins for S&P 500 companies in the 2nd quarter are 13%, above the 5-year average of 10.6%.
So far in the 2nd quarter, the technology and communication services sectors have had the strongest earnings seasons. In fact, 97% of S&P 500 tech companies and 96% of communication services companies have beaten analyst earnings estimates in the 2nd quarter. Just 3% of tech companies and 4% of communication services companies have reported earnings below analyst expectations up to this point.
Not surprisingly, 98% of S&P 500 healthcare sector companies and 96% of communication services companies have also exceeded analyst revenue estimates in the 2nd quarter as well.
On the other end of the spectrum, the consumer staples sector and the utilities sector have performed the worst in the 2nd quarter. In fact, 25% of utilities sector companies have reported earnings misses, while 17% of consumer staples companies have fallen short of analyst earnings expectations.
For the 3rd quarter, 59% of S&P 500 companies that have issued earnings guidance up to this point have beaten consensus analyst estimates, which is well above the 5-year average of just 37% guidance beats. Analysts are currently calling for S&P 500 earnings growth to slow to 28% and revenue growth to slow to 14.4% in the 3rd quarter.
Perhaps the best measure of how well the 2nd-quarter earnings season has gone so far is the performance of the S&P 500 itself. Since the beginning of July, the SPDR S&P 500 ETF Trust (NYSE: SPY) is up another 2.7%.
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