Don't Let Me Down: An Earnings Season Update

With nearly 85% of S&P 500® companies having reported results for second-quarter earnings season (as of August 4th), it's time for an update on how the profits picture has unfolded thus far—as well as a peek into what expectations are for the back half of the year. The simplest way to sum up performance in the second quarter is "mixed." On the one hand, earnings are contracting, revenue growth is virtually flat, and guidance has weakened. On the other hand, the beat rate has climbed, earnings estimates are up from their worst points, and the percentage by which companies are beating estimates has moved higher (all to be explained below).

On the right path?

Starting with a broad overview, you can see in the chart below that the "blended" estimate for earnings growth—which combines results from companies that have already reported with estimates for those that have yet to report—is in negative territory. At -4.2% year-over-year, it's the worst decline since the third quarter of 2020 and is sandwiched between a zero-growth quarter (the first quarter of this year) and what is expected to be a rebound into positive territory (starting in the third quarter).

Growing pains still here