Earnings Watch: Here are 5 things we’ve learned so far from earnings season

by | Jul 22, 2022 | Stock Market

Only about one-fifth of the S&P 500 have so far reported second-quarter results, but at least five major talking points have emerged — some quite surprising — since earnings season started more than a week ago. A key concern heading into earnings season wasn’t what happened during the previous three-month period, but how much companies would lower forward guidance, given growing fears the Federal Reserve’s aggressive interest rate increases to fight historically high inflation would tip the U.S. economy into a recession.

But with 106 of the 503 S&P 500 companies having reported results through Friday morning, according to FactSet, that expected negative has so far been a positive. For the second quarter, while more companies than usual are beating profit and revenue expectations, they’re beating them by narrower-than-usual margins.So far, so good Through Friday morning, 75.5% of the companies reporting have been beating consensus analyst projections for earnings per share, by an average of about 4.7%, according to I/B/E/S data provided by Refinitiv. That compares with 66% of companies beating EPS estimates in a typical quarter since 1994, and an average beat margin of 9.5% for the prior four quarters. And for revenue, 68.9% of the companies have topped forecasts by an average of about 1.3%, compared with 62% of companies beating in a typical quarter since 2002 and an average beat rate of 3.4% for the prior four quarters. More beats by less than the usual amount has led to year-over-year growth in the blended EPS estimate, which includes results from companies that have already reported results and estimates of companies yet to report, to slip to 5.0% from an estimate of 5.7% growth as of March 31, accordi …

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