With nearly 40% of S&P 500 companies having reported their Q2 earnings, the overall picture is one of continued strength and steady improvement. A higher-than-usual number of companies are surpassing analysts’ expectations, and projections for both the current and upcoming quarters are being revised upward, per Earnings Trends issued on July 29, 2025.
Among the 198 S&P 500 companies that have reported their Q2 results so far, total earnings are up 7.0% compared to the same quarter last year, driven by a 5.5% increase in revenues. Additionally, 82.8% of these companies have exceeded EPS estimates, while 79.8% have surpassed revenue forecasts.
The percentage of these 198 S&P 500 companies surpassing both EPS and revenue estimates is notably higher than the historical norm. Specifically, the Q2 EPS beat rate of 82.8% exceeds the 20-quarter average of 80.1%, while the revenue beat rate of 79.8% is well above the historical average of 69.0% for this group.
Sector ETFs in Focus
Against this backdrop, below we highlight a few sector-based exchange-traded funds (ETFs) that should enjoy the tailwind of rising Q3 estimates and strong year-over-year growth.
Finance – Vanguard Financials ETF VFH – Zacks Rank #2 (Buy)
In the Financial sector, Q2 earnings have been reported by companies accounting for 64.5% of the sector’s market capitalization in the S&P 500. These firms have posted a 17.6% year-over-year increase in earnings, alongside a 5.8% rise in revenues. So far, 90.0% have beaten EPS estimates, while 76.0% have exceeded revenue forecasts.
This is a remarkably better performance from the Finance sector relative to other recent periods, with Q2 earnings growth and the percentage of revenue beats grabbing attention in particular.
Tech – Technology Select Sector SPDR ETF XLK – Zacks Rank #1 (Strong Buy)
In the Technology sector, Q2 results are in for companies representing 22.4% of the sector’s market capitalization within the S&P 500. These companies have reported a 15.2% increase in earnings and a 10.6% rise in revenues compared to the same quarter last year. Note that, 90.9% have exceeded EPS estimates, and 100% have topped revenue expectations.
Consumer Discretionary – Consumer Discretionary Select Sector SPDR ETF XLY – Zacks Rank #3 (Hold)
For the Consumer Discretionary sector, Q2 earnings are expected to be 109.7% in Q2 on 2.5% higher revenues. Q3 earnings are expected to be up 1.1% from the same period last year on 2.1% higher revenues.
Aerospace – iShares U.S. Aerospace & Defense ETF ITA – Zacks Rank #2
For the Aerospace sector, Q2 earnings are expected to be 24.8% in Q2 on 11.5% higher revenues. The Q3 earnings are expected to surge 250.9% year over year on 9.9% higher revenues.
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Technology Select Sector SPDR ETF (XLK): ETF Research Reports Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports Vanguard Financials ETF (VFH): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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