Nearly a Third of Tech Has Raised Guidance

With more than 1,500 companies already reporting their Q2 numbers, we can confidently say that this has been one of the strongest earnings seasons relative to expectations in the last couple of decades.

During the Q2 reporting period that began back in early July, 77% of companies have reported earnings per share (EPS) that were stronger than consensus analyst estimates. That’s about ten percentage points higher than the 67% EPS beat rate we’ve seen across the 90,000+ earnings reports that have occurred over the last ten years.

For those of you unaware, you can monitor these readings daily at the macro and single-stock level by using our helpful Earnings Explorer tool.

Looking under the hood a bit more, below we show this earnings season’s EPS beat rate for each of the eleven major sectors.

Four sectors have beat rates that are stronger than the overall reading of 76.7%: Technology, Industrials, Health Care, and Real Estate. The Tech sector reigns supreme with the highest beat rate at 85.1%. Out of every 100 Tech stocks that have reported, 85 of them have beaten analyst EPS estimates.

On the flip side, the two sectors with the weakest beat rates this season have been Communication Services (68.6%) and Energy (69.4%). However, beat rates in the high-60s are still relatively strong compared to history.

Along with reporting better-than-expected results for Q2, companies have also been exceedingly positive about the future. As shown below, more than 15% of the companies that have reported this season have raised forward guidance. That’s five percentage points higher than a “raised guidance” reading of 10% for all companies that have reported over the last ten years.

Incredibly, nearly one out of every three Technology sector companies that have reported this earnings season have raised guidance.

After a Tech sell-off in June and early July put investors on edge, the actual Tech companies reporting results and guidance over the last four weeks have quieted much of that anxiety.