Wall Street analysts expect S&P 500 companies to grow second-quarter earnings 23.6% year over year, up from the 18.8% forecast at the end of March. History suggests the final figure could climb above 29% as more companies report.
Analysts now expect S&P 500 companies to deliver year-over-year earnings growth of 23.6% for the second quarter, a sharp rise from the 18.8% growth they forecast at the end of March. That would mark the second consecutive quarter with earnings growth above 20%, and the early reports point higher still.
History points to a bigger number
Analysts often underestimate the earnings power of large US companies, so the consensus tends to rise as the reporting season runs. In 37 of the past 40 quarters, the final earnings growth rate topped the estimate that stood at the end of the quarter, with only Q1 2020, Q3 2022, and Q4 2022 breaking the pattern.
The scale of those upgrades is consistent. Over the past ten years, S&P 500 companies have beaten EPS estimates by an average of 7.4%, and roughly 76% have reported earnings above consensus. Those surprises have lifted the index's overall growth rate by 6.2 percentage points on average during past seasons, which would push Q2 growth from about 23.2% toward 29.4%. If the historical pattern holds, actual growth could exceed 29%, its highest level since Q4 2021.
Early reports reinforce the optimism
Only 4% of S&P 500 companies have reported so far, but the first batch is already beating forecasts. Among the first 18 companies to report, 89% exceeded EPS estimates and 72% topped revenue expectations, lifting the index's expected growth rate from 23.2% to 23.6%.
Investors believe a strong earnings season could justify current Wall Street valuations, and management guidance for the second half — on AI-related capital spending, cost pressures, and higher energy prices — will shape that judgment. For now the bar sits high: the index trades at a forward P/E of 20.5, above both its five- and ten-year averages.
Source: XTB.com
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