According to recent analysis by UBS Securities, the quarterly earnings of S&P 500 companies have surged, showing an impressive growth rate of nearly 12% year-over-year, with a significant number of firms surpassing Wall Street expectations as the current reporting season nears its conclusion. As of the latest report, a total of 486 companies within this important index have disclosed their financial results, highlighting a 5.2% increase in revenue which corroborates the strong earnings growth. UBS noted that the overall earnings exceeded market projections by approximately 5.6%, although this figure marks a decline from the 7.2% recorded in the previous quarter and remains above the historical average of 4.8%.
A noteworthy 74% of the companies reported earnings that beat market forecasts. Additionally, the quarterly revenue figures showcased a collective outperformance against estimates, with an overall upside surprise of 1.2%. This performance also exceeds the 0.8% surprise seen in the prior quarter and aligns with a long-term average of 1%, with about 53% of companies exceeding revenue expectations. In examining individual performances, Nvidia's ($NVDA) earnings exceeded expectations; however, the magnitude of its earnings surpass differed from the exceptional beats observed in the preceding two quarters.
Recently, Nvidia reported that its adjusted earnings per share (EPS) for the fiscal second quarter stood at $0.68, outpacing the analysts' forecast of $0.64. The latest findings unveil that surprises for leading tech companies, classified as the Big 6 TECH+, have been rather conventional and consistent with the trends reflected in the S&P 500 index, recording an aggregate surprise of 5.4%, just shy of the overall 5.6% reporting. Interestingly, every sector listed within the S&P 500 achieved an earnings beat for the quarter, with health care and financials taking the lead.
Revenue figures likewise demonstrated an upward surprise across nearly all sectors, excluding utilities, telecommunications, and consumer staple companies. This broad performance is crucial, showing resilience across varied economic environments. Notably, companies that managed to beat estimates on both EPS and revenue showcased an exceptional market outperformance of 2.9%, distinctly higher than the historical average of 1.7%.
Conversely, firms that fell short in both metrics faced a comparative underperformance of 2%, notably worse than the 3.1% underperformance historically noted. Looking ahead to the upcoming week, key companies preparing to unveil their earnings results include Broadcom ($AVGO), Dollar Tree ($DLTR), Hewlett Packard Enterprise ($HPE), and Hormel Foods ($HRL).
As investors keep a close watch, these results will further shape the narrative around S&P 500 performance and economic indicators moving forward..