A sizzling earnings season looms

Corporate America is about to report the biggest jump in profits since late 2021. That’s the consensus view from Wall Street’s armies of analysts tracking companies in the S&P 500.

Data provider FactSet tallies up, blends, weights, and averages all the earnings-per-share estimates for the S&P 500 companies these analysts cover. They expect earnings per share hit a quarterly record of $58.57 in the three months ended in June, up 9% from the same quarter last year.

If history is any guide, these analysts are probably under-estimating. Typically, about 70% of S&P 500 companies beat the numbers that Wall Street predicts — according to Thomson Reuters data going back to 1994. That’s because corporate executives, whose statements tend to shape analyst estimates, prefer to underpromise and overdeliver on their results, which can generate a satisfying price bump for shares. Last quarter, profits per share exceeded expectations by a whopping 8.3% with nearly 400 firms posting better than anticipated bottom line figures, according to data from Bloomberg.

The earnings festivities quasi-formally get underway later this week, with JPMorgan due to release its quarterly results on Friday morning.