Corporate Earnings Update

Busiest Week in Earnings Season

This past week was the busiest of the quarterly earnings season, with 37% of the companies in the S&P 500 reporting results. And while most of the headlines trended toward the negative, there were some positive surprises too – most notably Tesla, McDonald’s, and Ford.

But everyone wanted to talk about Amazon and Alphabet (Google’s parent) after both reported a slowdown in revenue growth in the third quarter. Interestingly, very few market pundits talked about how both Amazon and Alphabet exceeded forecasts.

With 48% of the companies in the S&P 500 reporting actual results for the quarter, research–firm FactSet reports that:

  • 77% of S&P 500 companies have reported a positive EPS surprise and 59% have reported a positive sales surprise
  • The blended earnings growth rate for the S&P 500 is 22.5%. If 22.5% is the actual growth rate for the quarter, it will mark the third highest earnings growth since Q3 2010
  • Nine sectors have higher growth rates today (compared to September 30) due to positive EPS surprises and upward revisions to EPS estimates
  • The forward 12–month P/E ratio for the S&P 500 is 15.5. This P/E ratio is below the 5-year average (16.4) but above the 10–year average (14.5)