A benign inflation reading and a slew of earnings reports
provide a reassuring backdrop for today's trading session, with
stocks on track to reverse the prior days' geopolitics-inspired
We are in the thick of the Q2 earnings season now, with today's
reporting docket the busiest thus far in this cycle. Including this
morning's mixed reports from the likes of
) and others, we now have Q2 results from 115 S&P 500 members
that account for 33.5% of the index's total market
While results from none of this morning's bellwethers were
particularly strong, McDonald's and Travelers notably missed
earnings estimates. On deck for release after the close are reports
Total earnings for these 115 companies are up +8.1% from the
same period last year on +3.6% higher revenues, with 67% beating
EPS estimates and 52.4% coming out with positive revenue surprises.
This is better performance than we have seen at this stage in other
recent reporting cycles.
The +8.1% earnings growth at this stage in Q2 is magnitudes
better than what this same group of companies came out with in Q1
and the 4-quarter average (through Q1), and broadly in-line with
the 4-quarter average growth pace (through Q1). The comparison is
even more favorable on the revenue side, both in terms of growth
rates as well as beat ratios.
There is some modest improvement on the guidance front as well.
The improvement isn't so much in terms of companies starting to
guide higher, but rather marginally fewer guiding lower and
qualitatively offering a more reassuring business outlook.
Continuation of this trend through the rest of this earnings season
will represent an improvement over what we have become accustomed
to seeing in recent quarters, resulting in fewer negative revisions
to forward estimates.
Hard to tell at this stage if we are at the starting point of a
favorable shift in the aggregate earnings picture, but the results
thus far do point in that direction.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
To read this article on Zacks.com click here.