One of the Highest Beat Rates Ever Recorded

Corporate America delivered another exceptional earnings season, with companies continuing to adjust to a shifting macroeconomic landscape. Companies effectively navigated cost pressures during the quarter (of note, tariffs were less of a focal point in earnings calls), although a few moving pieces supported third quarter results.

Among earnings highlights:
• S&P 500 earnings per share (EPS) growth is tracking over 13%, with 95% of companies having reported, cruising past the 7.4% consensus forecast at quarter-end on September 30.
• S&P 500 revenue grew 8.4%, an atypically strong 2.5% above expectations at quarter-end.
• The average earnings upside surprise of 7.0% matches the 10-year average but fell short of the 8.4% five-year average. Given the bar has been steadily rising over the past six months, these numbers are more impressive than they seem on the surface.
• A strong 82% of companies beat EPS targets, above the five-year average (78%) and nearly topping the third quarter of 2021’s recent high of 82.2%. Prior to the post-COVID-19 earnings rebound when analysts got caught way offsides, we find no higher beat rate since the start of this data set in 2009.
• The revenue beat rate of 76% tops the five-year average (70%).
• The fastest earnings growth for the quarter was generated by technology (28.4%), financials (23.5%), and utilities (23.1%).
• Technology (15.9%), healthcare (10.4%), and communication services (10.0%) delivered the strongest revenue growth.