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A couple of accountants broke down how earnings season has been — and found a surprise.
“Stocks and Savings” podcast co-hosts Andreea Ion and James Galbin discussed on a recent episode how their portfolios fared in second-quarter earnings.
“I think the biggest surprise was actually how strong the reports were,” Ion said, citing data from financial data platform FactSet that 81% of companies in the S&P 500 beat analysts’ revenue forecasts in Q2.
Galvin said this was surprising given fears of how tariffs would upset the global economy.
“On one hand, you have the boom in artificial intelligence that companies are pouring money into left, right, and center,” he said. “But then on the other hand, you’ve got US tariffs that are at their highest since the Great Depression and are slowly but surely making themselves felt in the economy.”
“I think it was a case of Big Tech and the AI boom simply overpowering any downside caused by tariffs,” Galvin added.
FactSet’s report was issued in early August and was based on 90% of S&P 500 firms that announced results at that time. It found that the proportion of those surpassing Wall Street expectations for earnings per share and revenue was above both the five-year average of 78% and the 10-year average of 75% for earnings per share, per FactSet.
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“If 81% is the final number for the quarter, it will mark the highest percentage of S&P 500 companies reporting a positive EPS surprise for a quarter since Q3 2023 (also 81%),” John Butters, vice president and senior earnings analyst and author of the report, wrote.
He said that, in aggregate, the companies that beat analysts’ estimates did so by 8.4%.
The financial, communication services, information, tech, and consumer discretionary services sectors have been the largest contributors to the earnings surprises that drove an overall rise in the index’s year-on-year growth rate during this period, which FactSet estimated to be 11.8%.
Some of the best performers were Warner Bros. Discovery, which achieved $0.63 earnings per share compared to analysts’ consensus of a loss per share of $0.24; Coinbase Global, which had $5.14 versus $1.19; and Regeneron Pharmaceuticals, which had $12.89 versus $8.43.
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