An Earnings Surprise Party
Second quarter earnings have seen a significant number of S&P 500 companies beat analysts’ estimates, causing a slew of positive revenue and earnings surprises. The ability of companies to surpass Wall Street’s expectations bodes well not only for the businesses themselves but also for the overall U.S. economy.
  • As shown above, in the ​most recent quarter 69% of S&P 500 companies reported sales above estimates, the highest number in six years, and 73% reported earnings per share (EPS) above estimates.

  • The second quarter’s earnings reports also revealed that companies are beating EPS estimates by greater margins than previously: 6.0% compared to the 4.2% average of the past five years.

  • The Information Technology and Health Care sectors have thus far seen the largest percentages of companies (85% and 84%, respectively) beat their earnings compared to other sectors.

  • With the majority of companies announcing extremely strong performance, we are encouraged by the prospects of the market and the economy.​

The views expressed are the views of Fred Alger Management, Inc. as of August 2017. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.

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