Positive Earnings Kickoff: Banks Lead Q3 Growth as More Companies Prepare to Report
The third quarter (Q3) earnings season has begun on a promising note, largely powered by banks and other financial sector companies. As we enter a crucial week with over 450 companies set to report their results, including 109 S&P 500 members, it will be exciting to see if this positive trend continues. By the end of this week, data will be available for 36% of S&P 500 members, encompassing key market sectors.
As of Friday, October 18th, 71 S&P 500 companies have reported Q3 results, accounting for 15.6% of the total market capitalization of the index. Collectively, these firms have seen total earnings rise by +6.3% compared to the same period last year, supported by a +4.8% increase in revenues. Notably, 81.7% of these companies surpassed earnings per share (EPS) estimates, and 67.6% exceeded revenue forecasts.
Among these companies, 60.6% have managed to beat both EPS and revenue estimates. This performance is significantly stronger than in previous periods, as illustrated in the comparison charts below, which detail earnings and revenue growth rates.
Image Source: Zacks Investment Research
The second set of comparison charts further contextualizes the percentages of EPS and revenue beats in this quarter’s historical framework.
Image Source: Zacks Investment Research
The forthcoming charts highlight revenue performance and the overall blended beats percentage for the 71 S&P 500 members mentioned above.
Image Source: Zacks Investment Research
The Big Picture on Earnings
With over 450 companies due to report this week, notable names include General Motors and 3M on Tuesday, Coca-Cola (KO) and Boeing on Wednesday morning, followed by Tesla (TSLA), IBM, and Lam Research after the market closes. UPS (UPS) and Southwest Airlines will report on Thursday morning, while Colgate-Palmolive will do so on Friday.
Overall, the S&P 500 is anticipated to see Q3 earnings increase by +3% from last year, bolstered by +4.7% growth in revenue when combining reported results with estimates for upcoming companies.
The chart below depicts the Q3 earnings and revenue growth rate, set against the previous four quarters and future expectations.
Image Source: Zacks Investment Research
Despite a modest growth trajectory in Q3, the total earnings for the period are projected to set a new all-time quarterly record, as illustrated in the chart below.
Image Source: Zacks Investment Research
Looking ahead to the final quarter of the year, S&P 500 earnings are set to rise by +9.3% year-over-year, with +5.2% higher revenues. Interestingly, while we previously saw significant estimate cuts before the Q3 earnings season, current Q4 estimates remain stable, as shown in the chart below.
Image Source: Zacks Investment Research
The overall earnings landscape is also being analyzed on an annual basis, indicating +7.4% growth this year, with expectations for double-digit increases in 2025 and 2026.
Image Source: Zacks Investment Research
It’s important to note that this year’s +7.3% earnings growth improves to +9.3% when excluding the Energy sector.
For a comprehensive analysis of the earnings landscape and what the future may hold, check out our weekly Earnings Trends report >>>> Earnings Results Provide Reassuring Economic View
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
