Earnings Season Is Off to a ‘Promising Start.’ What’s Next?

It’s early in the fourth-quarter earnings season, but current data indicates a strong start. 

As of Friday, only 16% of S&P 500 companies had reported their results, according to a FactSet analysis. Of the companies that reported, four-fifths beat Wall Street’s estimates, higher than the five-year average, though the scale of that outperformance was below the five-year average. 

The companies that beat estimates for earnings per share came in more than 7% higher than the consensus expectation, underperforming the five-year average of 8.5% but beating the 10-year average, said FactSet, based on historical results for the entire index.

“Early indications look promising for the Q4 season,” Oppenheimer analysts wrote Monday, with reported earnings growth up nearly 17% and revenue growth rising nearly 5%. Nearly 240 more S&P 500 companies are slated to report by the end of next week. 

Bank of America analysts said an assessment of earnings-call transcripts indicated optimism from corporate executives. More than 60% of the companies reporting to date “expressed optimism during earnings calls, [a] record high and a big jump from 46% last quarter.”

This week’s results are coming in large numbers—but the focus may be on comparatively few names given the backdrop of Monday’s tech-driven selloff, which tarnished the runs of several stocks that had seen strength in recent months amid AI-driven optimism.

Several Big Tech companies are set to report this week, including Microsoft (MSFT), Apple (AAPL), Tesla (TSLA) and Meta Platforms (META). Starbucks (SBUX), meanwhile, will offer additional insight into consumer spending.