More than halfway through the third quarter earnings season, the S&P 500 is reporting mixed results relative to analyst expectations. While the percentage of S&P 500 companies reporting positive earnings surprises is above recent averages, the magnitude of earnings surprises is below recent averages. As a result, the index is reporting higher earnings for the third quarter today relative to the end of last week and relative to the end of the quarter. The index is also reporting double-digit earnings growth for the fourth straight quarter. In addition, S&P 500 companies are reporting impressive numbers for revenues relative to analyst expectations and year-ago results.
Overall, 64% of the companies in the S&P 500 have reported actual results for Q3 2025 to date. Of these companies, 83% have reported actual EPS above estimates, which is above the 5-year average of 78% and above the 10-year average of 75%. If 83% 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 Q2 2021 (87%). In aggregate, companies are reporting earnings that are 5.3% above estimates, which is below the 5-year average of 8.4% and below the 10-year average of 7.0%. 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 Information Technology, Consumer Discretionary, and Health Care sectors, partially offset by negative EPS surprises reported by companies in the Communication Services sector, were the largest contributors to the increase in the overall earnings growth rate for the index over this period. Since September 30, positive EPS surprises reported by companies in the Financials, Information Technology, and Consumer Discretionary sectors, partially offset by downward revisions to EPS estimates and negative EPS surprises reported by companies in the Communication Services and Industrials sectors, 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 third 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 third quarter is 10.7% today, compared to an earnings growth rate of 9.1% last week and an earnings growth rate of 7.9% at the end of the third quarter (September 30).
If 10.7% is the actual growth rate for the quarter, it will mark the fourth consecutive quarter of double-digit (year-over-year) earnings growth for the index. It will also mark the ninth consecutive quarter of year-over-year earnings growth for the index.
Eight of the eleven sectors are reporting year-over-year growth, led by Information Technology, Utilities, Financials, and Materials sectors. On the other hand, three sectors are reporting a year-over-year decline in earnings, led by the Communication Services sector.
In terms of revenues, 79% 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 66%. In aggregate, companies are reporting revenues that are 2.2% 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 Health Care Discretionary) sector were the largest contributors to the increase in the overall revenue growth rate for the index over this period. Since September 30, positive revenue surprises reported by companies in the Health Care, Consumer Discretionary, and Financials 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 third quarter is 7.9% today, compared to a revenue growth rate of 7.0% last week and a revenue growth rate of 6.3% at the end of the third quarter (September 30).
If 7.9% is the actual revenue growth rate for the quarter, it will mark the highest growth rate reported by the index since Q3 2022 (11.0%). It will also mark the 20th consecutive quarter of revenue growth for the index.
Ten sectors are reporting year-over-year growth in revenues, led by the Information Technology sector, 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 Q4 2025 through Q2 2026, analysts are calling for earnings growth rates of 7.6%, 11.8%, and 12.8%, respectively. For CY 2025 analysts are predicting (year-over-year) earnings growth of 11.2%.
The forward 12-month P/E ratio is 22.9, which is above the 5-year average (19.9) and above the 10-year average (18.6). This P/E ratio is also slightly above the forward P/E ratio of 22.8 recorded at the end of the third quarter (September 30).
During the upcoming week, 136 S&P 500 companies (including 2 Dow 30 companies) are scheduled to report results for the third quarter.
Q3 2025: Scorecard
Q3 2025: Growth
This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.