Q2 Scorecard: S&P 500 Beat Rates Hit Unusual Highs as Earnings Surprise Sets a Record
The second-quarter reporting season is nearly complete, and the numbers describe one of the strongest scorecards in recent memory. According to FactSet's earnings season update published August 7, 88% of S&P 500 companies have now reported results, and 86% of them delivered earnings per share above analyst estimates. That beat rate runs well ahead of the five-year average of 78% and the ten-year average of 76%.
Top-line performance has been similarly firm. FactSet's data show 76% of reporting companies exceeded revenue expectations, compared with a five-year average of 70% and a ten-year average of 68%. Revenue surprises have averaged 3.2% above estimates, roughly double the historical norm.
The most striking figure is the size of the profit beats. In aggregate, companies have reported earnings 29.2% above expectations, versus a five-year average surprise of 7.0% and a ten-year average of 7.4%. FactSet says that is the highest aggregate earnings surprise the index has posted since the firm began tracking the metric in 2008. On the revenue side, the 3.2% aggregate surprise also runs well above the five-year average of 1.9% and the ten-year average of 1.6%.
There is an important asterisk on that record. FactSet notes that Alphabet and Amazon generated unusually large EPS surprises tied to investment gains totaling a combined $151.4 billion, which mechanically inflated both the surprise figure and the index-level growth rate. Even setting that distortion aside, the breadth of beats across the index has been unusually wide this quarter.
Growth rates have climbed steadily as results have rolled in. The blended earnings growth rate for the second quarter now stands at 50.4%, up from 47.4% a week earlier and far above the 23.1% analysts expected when the quarter closed, per FactSet. Blended revenue growth has reached 15.0%, versus the 12.2% projected at quarter-end.
The strength is broad by sector as well. Ten of the eleven S&P 500 sectors are reporting year-over-year earnings growth, and eight are posting double-digit gains, led by energy, communication services and consumer discretionary. Health care stands alone as the only sector with declining earnings for the quarter.
Looking ahead, analysts have not dialed back their optimism. FactSet reports that consensus calls for earnings growth of 27.4% in the third quarter and 25.2% in the fourth, with full-year 2026 growth projected at 30.0%. Those forecasts imply the market expects momentum to carry well beyond the current season.
Valuation is the counterweight. The index trades at a forward 12-month price-to-earnings ratio of 20.0, slightly above its five-year average of 19.9 and its ten-year average of 19.0, according to FactSet. That premium leaves less room for disappointment, which may help explain why several companies that merely met expectations, or reaffirmed rather than raised guidance, have seen their shares sold hard in recent sessions.
With most of the index already on the board, attention now shifts to the season's long tail. Nine S&P 500 companies, including one Dow component, are scheduled to report this week, per FactSet, a group that includes Cardinal Health, Cisco Systems and Applied Materials. Their results will not move the season's aggregate statistics much, but in a market trading near record levels on the strength of this scorecard, each remaining report carries outsized signaling power.
