Heading into the start of the earnings season, analysts and companies have been more optimistic than normal in their earnings outlooks for the third quarter. As a result, estimated earnings for the S&P 500 for the third quarter are higher today compared to expectations at the start of the quarter. On a year-over-year basis, the index is expected to report earnings growth for the 9th consecutive quarter.
In terms of estimate revisions for companies in the S&P 500, analysts increased earnings estimates for Q3 2025 during the quarter. On a per-share basis, estimated earnings for the third quarter increased by 0.1% from June 30 to September 30. In a typical quarter, analysts usually lower earnings estimates during the quarter. Over the past five years (20 quarters), earnings expectations have fallen by 1.4% on average during a quarter. Over the past ten years, (40 quarters), earnings expectations have fallen by 3.2% on average during a quarter.
In terms of guidance, both the number and percentage of S&P 500 companies issuing positive EPS guidance for Q3 2025 are higher than average. At this point in time, 112 companies in the index have issued EPS guidance for Q3 2025. Of these companies, 57 have issued negative EPS guidance and 55 have issued positive EPS guidance. The number of companies issuing positive EPS guidance is well above the 5-year average (42) and well above the 10-year average (39). The percentage of S&P 500 companies issuing positive EPS guidance for Q3 2025 is 49% (55 out of 112), which is also well above the 5-year average of 43% and well above the 10-year average of 39%.
Due to the upward revisions to earnings estimates by analysts and the positive EPS guidance issued by companies, the estimated (year-over-year) earnings growth rate for Q3 2025 is higher today relative to the start of the third quarter. As of today, the S&P 500 is expected to report (year-over-year) earnings growth of 8.0%, compared to the estimated (year-over-year) earnings growth rate of 7.3% on June 30.
If 8.0% is the actual growth rate for the quarter, it will mark the 9th consecutive quarter of year-over-year earnings growth for the index.
Seven of the eleven sectors are projected to report year-over-year growth, led by the Information Technology, Utilities, Materials, and Financials sectors. On the other hand, four sectors are predicted to report a year-over-year decline in earnings, led by the Energy and Consumer Staples sectors.
In terms of revenues, analysts also raised their estimates during the quarter. As of today, the S&P 500 is expected to report (year-over-year) revenue growth of 6.3%, compared to the expectation for revenue growth of 4.8% on June 30.
If 6.3% is the actual revenue growth rate for the quarter, it will mark the second-highest growth rate reported by the index since Q3 2022 (11.0%), trailing on the previous quarter. It will also mark the 20th consecutive quarter of revenue growth for the index.
Ten sectors are projected to report year-over-year growth in revenues, led by the Information Technology, Communication Services, and Health Care sectors. On the other hand, the Energy sector is the only sector predicted to report a year-over-year decline in revenues.
For Q4 2025 through Q2 2026, analysts are calling for earnings growth rates of 7.4%, 11.7%, and 12.7%, respectively. For CY 2025 analysts are predicting (year-over-year) earnings growth of 10.9%.
The forward 12-month P/E ratio is 22.8, which is above the 5-year average (19.9) and above the 10-year average (18.6). This P/E ratio is also above the forward P/E ratio of 22.1 recorded at the end of the second quarter (June 30).
During the upcoming week, 37 S&P 500 companies (including 5 Dow 30 components) are scheduled to report results for the third quarter.
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