Key Points

  • S&P earnings are up more than 25% for the first quarter and estimates are for more than 21% for the full year.

  • Following a record-setting “beat rate” of nearly 80%, is the best now behind us?

  • The earnings bar is now set high, while valuations could be weighed down by higher inflation and interest rates.

With more than 85% of first quarter S&P 500 earnings having been reported, it’s time for a quick chart-filled update on what has been a stellar earnings season to-date. As you can see in the table below, across the spectrum—from the blended growth rate (already reported plus remaining estimates) to the percentage above estimates to the percentage surprise factor—the results have been exceptionally strong.


Source: Charles Schwab, Thomson Reuters I/B/E/S, as of May 4, 2018.

Beat it

The 79% “beat rate” for the overall S&P 500 index is an all-time record and credit can be given to tax reform—in particular the corporate tax cut to a 21% statutory rate. In November of 2017 the expectation for calendar year 2018 year-over-year growth for the S&P 500 was about 11%; while today, that’s grown to about 21%. In the table below you can see the expectations for both 2018 and 2019 growth for the index overall, as well as the 11 S&P sectors.


Source: Charles Schwab, Thomson Reuters I/B/E/S, as of May 4, 2018.