More companies beat forecasts than usual
With results in from 60% of the index, FactSet found that 82% of those companies had beaten earnings-per-share estimates. That share exceeded both the five-year average of 78% and the 10-year average of 77%. The size of the aggregate beat told a different story: 1.9%, compared with historical averages of 7.5% and 8.0%, respectively. If unchanged, it would be the smallest positive earnings surprise since the 1.3% recorded in Q4 2022.
An earlier snapshot from Fundstrat, dated October 19, covered 45 companies, or 9% of the index. In that group, 87% beat EPS forecasts, with a median beat of 4%; the remaining 13% missed by a median of 6%. Revenue exceeded estimates at 67% of the companies, with a median beat of 2% and a median shortfall of 1% among those that missed.
The Fundstrat Direct Team also published a Q3 beats-versus-misses note on November 5 for its clients. The supplied text contains disclosures rather than earnings figures; the numbers reported here come from Fundstrat's October 19 update, FactSet and Morningstar.
Earnings growth reaches 30.2%
FactSet's October 30 snapshot put year-over-year earnings growth at 30.2%, using a blended measure that combines reported results with estimates for companies still to report. That measure had risen from 29.5% a week earlier and 29.1% on September 30, the end of the quarter.
A final growth rate of 30.2% would extend the index's run of growth above 25% to three quarters and its run of double-digit growth to eight quarters.
Revenue results also exceeded forecasts. As of October 30, 70% of reporting companies had beaten revenue estimates, matching the five-year average and topping the 10-year average of 68%. Aggregate revenue was 1.7% above expectations. Blended revenue growth stood at 13.4%, which, if confirmed, would mark a third consecutive quarter of double-digit growth.
Profit growth outside Big Tech pulls ahead
The "Magnificent 7" mega-cap technology stocks were on track for 29% profit growth in Q3, versus 33.6% for the other 493 S&P 500 companies, Morningstar reported on November 4, citing FactSet. That would be the first time since the end of 2022 that the group's aggregate earnings growth lagged the rest of the index.
Morningstar also reported a divergence in market performance over the preceding month: the equal-weight S&P 500 gained about 5%, while the capitalization-weighted index fell 2%. The report described a rotation away from mega-cap technology stocks that strategists expected to continue amid concerns about Big Tech's AI spending.
Valuation and the remaining reporting schedule
As of October 30, the S&P 500 traded at 18.7 times forward 12-month earnings, according to FactSet. That was below its five-year average of 19.8, its 10-year average of 19.1 and the September 30 reading of 19.0.
In the same update, FactSet said analysts projected year-over-year earnings growth of 28.4% for Q4 2026 and 32.9% for the full calendar year. The reporting calendar was still busy: 140 S&P 500 companies, including three Dow 30 components, were scheduled to release Q3 results in the week following the October 30 update.
