Let’s talk about earnings!

Heading into the second quarter earnings season, many were concerned about companies meeting top and bottom-line expectations. The data has been mostly positive with aggregated sales improving by 2.97% over expectations and earnings improving by 4.40% over expectations.

Companies are beating sales estimates by a wider margin, but earnings by a lower margin than their five-year averages of 1.8% and 8.8%, respectively.

This may be evidence that inflation and a slowing economy may not be impacting businesses as much as feared. Coinciding with the earnings releases, the S&P 500 Total Return Index was up 11.33% from June 30, 2022, to August 11, 2022.

The data isn’t necessarily an outlier, as companies tend to routinely beat guidance. However, given the looming economic uncertainty, this period was better than expected.

Source: Helios Quantitative Research, Bloomberg, FactSet