Rising Estimates and Broad Growth Underpin Strong Earnings Outlook

Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>

Here are the key points:

• The Q3 earnings season reconfirms the broad-based strength we've seen in the last few reporting cycles. The earnings and revenue growth pace remains strong, but companies are finding it difficult to beat consensus revenue estimates. On the positive side, the revisions trend remains positive, with estimates for 2026 Q4 and full-year 2027 continuing to rise.

• Total Q3 earnings for the 200 S&P 500 members that have reported results already are up +32.6% from the same period last year on +12.0% higher revenues, with 80.5% beating EPS estimates and 69.0% beating revenue estimates. The proportion of these 200 index members beating both EPS and revenue estimates (the ‘blended’ beats percentage is 61.5%).

• For the Finance sector, we now have Q3 results from 68.5% of the sector’s market cap in the S&P 500 index. Total earnings for these companies are up +8.5% from the same period last year on +8.1% higher revenues, with 79.6% beating EPS estimates and 50.0% beating revenue estimates. Growth rates and beat percentages for Finance sector companies are tracking below other recent periods, with the revenue-beat percentage notably on the weak side.

• Micron (MU) and Nvidia (NVDA) continue to be material contributors to the Tech sector’s growth picture. Excluding Nvidia, Micron, and Alphabet (GOOGL), which enjoyed an outsized gain in the preceding period, Q3 earnings for the rest of the Tech sector would be up +23.8% (vs. +45.7% otherwise).

• For 2026 Q4, the expectation is for earnings growth of +28.4% on +12.6% higher revenues, with 15 of the 16 Zacks sectors expected to enjoy positive earnings growth and 9 sectors expected to produce double-digit earnings growth. Q4 estimates are steadily rising, with the current +28.4% earnings growth rate up from +26.6% at the start of October and +23.4% at the start of July.

The Finance Sector Earnings Scorecard

We noted here last week how the market has been less than impressed with bank results thus far. With results from 68.5% of the sector’s market capitalization in the S&P 500 index, we have a fairly representative sample of results for the sector.

Total earnings for the 68.5% of the sector’s market capitalization in the index that have reported results are up +8.5% from the same period last year on +8.1% higher revenues, with 79.6% beating EPS estimates and 50% beating revenue estimates. The ‘blended’ beats percentage for these Finance sector companies is 48.1%.

The comparison charts below show how the sector’s reported Q3 earnings and revenue growth rates compare across other recent periods for the same group of companies.

The Q3 revenue beats percentages for the sector are notably tracking lower relative to other recent periods and the lowest since 2025 Q1, as shown below.

For Q3 as a whole, combining actual results with estimates for the remaining stocks, total Finance sector earnings are expected to increase +6.2% from the same period last year, on +6.2% higher revenues.

The Earnings Big Picture

The chart below shows S&P 500 expectations for 2026 Q3, comparing what was achieved in the preceding four periods with what is currently expected for the following three quarters.

We have shown how Q3 estimates have moved higher since the quarter got underway. Below, we show how estimates for the last quarter of the year have evolved in recent weeks.

The chart below shows the overall earnings picture for the S&P 500 index on an annual basis.

As is the case with estimates for 2026 Q4, estimates for full-year 2027 are also moving higher, as the chart below shows.

Since the beginning of July, estimates for 2027 have increased for 10 of the 16 Zacks sectors, with Tech, Energy, Finance and Industrials leading the way.

With 40% of the S&P 500 results already in, the revisions trend has remained consistently positive. We will keep a close watch on this key metric through the remainder of this reporting cycle.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research