About one-third of the way through the second quarter earnings season, the S&P 500 is reporting somewhat mixed results.
On the one hand, the percentage of S&P 500 companies reporting positive earnings surprises is above average levels. On the other hand, the magnitude of earnings surprises is below average levels.
On the one hand, the index is reporting higher earnings for the second quarter today relative to the end of last week and relative to the end of the quarter. On the other hand, the index is still reporting its lowest year-over-year earnings growth rate since Q1 2024 (5.8%). In addition, more sectors are reporting a year-over-year decline in earnings (6) than year-over-year growth in earnings (5).
Overall, 34% of the companies in the S&P 500 have reported actual results for Q2 2025 to date. Of these companies, 80% have reported actual EPS above estimates, which is above the 5-year average of 78% and above the 10-year average of 75%. If 80% is the final number for the quarter, it will mark the largest percentage of S&P 500 companies reporting a positive EPS surprise for a quarter since Q3 2023 (81%). In aggregate, companies are reporting earnings that are 6.1% above estimates, which is below the 5-year average of 9.1% and below the 10-year average of 6.9%. Historical averages reflect actual results from all 500 companies, not the actual results from the percentage of companies that have reported through this point in time.
During the past week, positive EPS surprises reported by companies in the Communication Services and Financials sectors were the largest contributors to the increase in the overall earnings growth rate for the index over this period. Since June 30, positive EPS surprises reported by companies in the Financials and Communication Services sectors, partially offset by downward revisions to EPS estimates for companies in the Health Care sector, have been the largest contributors to the increase in the overall earnings growth rate for the index over this period.
As a result, the index is reporting higher earnings for the second quarter today relative to the end of last week and relative to the end of the quarter. The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings growth rate for the second quarter is 6.4% today, compared to an earnings growth rate of 5.6% last week and an earnings growth rate of 4.9% at the end of the second quarter (June 30).
If 6.4% is the actual growth rate for the quarter, it will mark the lowest earnings growth rate reported by the index since Q1 2024 (5.8%). However, it will also mark the eighth consecutive quarter of year-over-year earnings growth for the index.
Five of the eleven sectors are reporting year-over-year growth, led by the Communication Services, Information Technology, and Financials sectors. On the other hand, six sectors are reporting a year-over-year decline in earnings, led by the Energy sector.
In terms of revenues, 80% of S&P 500 companies have reported actual revenues above estimates, which is above the 5-year average of 70% and above the 10-year average of 64%. If 80% is the final number for the quarter, it will mark the largest percentage of S&P 500 companies reporting a positive revenue surprise for a quarter since Q2 2021 (87%). In aggregate, companies are reporting revenues that are 2.3% above the estimates, which is above the 5-year average of 2.1% and above the 10-year average of 1.4%. Again, historical averages reflect actual results from all 500 companies, not the actual results from the percentage of companies that have reported through this point in time.
During the past week, positive revenue surprises reported by companies in multiple sectors (led by the Communication Services and Health Care sectors) were the largest contributors to the increase in the overall revenue growth rate for the index over this period. Since June 30, positive revenue surprises reported by companies in multiple sectors (led by the Health Care and Communication Services sectors) have been the largest contributors to the increase in the overall revenue growth rate for the index over this period.
As a result, the blended revenue growth rate for the second quarter is 5.0% today, compared to a revenue growth rate of 4.4% last week and a revenue growth rate of 4.2% at the end of the second quarter (June 30).
If 5.0% is the actual revenue growth rate for the quarter, it will mark the 19th consecutive quarter of revenue growth for the index.
Ten sectors are reporting year-over-year growth in revenues, led by the Information Technology, Health Care, and Communication Services sectors. On the other hand, the Energy sector is the only sector reporting a year-over-year decline in revenues.
For Q3 2025 and Q4 2025, analysts are calling for earnings growth rates of 7.6% and 7.0%, respectively. For CY 2025 analysts are predicting (year-over-year) earnings growth of 9.6%.
The forward 12-month P/E ratio is 22.4, which is above the 5-year average (19.9) and above the 10-year average (18.4). 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, 164 S&P 500 companies (including 9 Dow 30 companies) are scheduled to report results for the second quarter.
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