American companies so far with their weakest earnings season in 7 quarters 📊

The American market has accustomed investors over recent quarters not only to dynamic growth but also to consistently surpassing consensus expectations. This makes the current earnings season look particularly weak compared to previous quarters. For the first time since Q4 2023, the percentage of S&P 500 companies that exceeded earnings-per-share (EPS) expectations has fallen below 80%. So far, only 75% of companies have reported better-than-expected results. Moreover, the share of companies reporting weaker-than-expected earnings is rising—currently at 18%, compared to 16% a year ago.

Share of companies that have exceeded expectations (orange), reported weaker results (red), and reported in line with expectations (gray). Source: Bloomberg Finance L.P.

Among sectors, utilities are performing the worst. In this segment, only 47% of companies have reported earnings above expectations, while as many as 33% have shown lower profits. The strongest sector so far is finance, where 85% of companies have posted better-than-expected results. Additionally, the average EPS beat relative to expectations in this sector is the second highest after consumer discretionary, reaching 11%.

Compared to Q4 2023, only three sectors have shown a higher positive earnings surprise than a year earlier: financials, communication services, and consumer discretionary

Average difference in reported EPS versus consensus. Source: XTB Research, LSEG