S&P 500 Earnings Beats Shrink to Just 2.7%, Weakest in Four Years Despite 84% of Companies Topping Forecasts

Key takeaways S&P 500 earnings surprises shrink to four-year low Eighty-four percent of companies still beat Wall Street forecasts Corporate profits surge despite shrinking earnings surprise margins Corporate America's earnings are beating Wall Street expectations at one of the narrowest margins in four years, even as an unusually high percentage of S&P 500 companies report better-than-expected profits. According to FactSet's November 6 earnings update, companies reporting third-quarter results have exceeded aggregate earnings estimates by just 2. 7%, compared with the five-year average of 7.

5%. If the figure holds through the end of reporting season, it would mark the smallest positive earnings surprise since the fourth quarter of 2022, when companies exceeded estimates by only 1. 3%.

S&P 500 Earnings Beats Reach 84%, but Surprises Remain Small FactSet reported that 88% of S&P 500 companies had released third-quarter results as of November 6, with 84% exceeding analysts' earnings-per-share expectations. That beat rate remains above the five-year average of 78% and the ten-year average of 77%, suggesting widespread corporate profitability. However, the magnitude of those surprises tells a different story.

Aggregate earnings exceeded forecasts by only 2. 7%, substantially below the five-year average of 7. 5% and the ten-year average of 8%.

The distinction matters because the percentage of companies beating estimates measures how frequently businesses exceed expectations, while the aggregate earnings surprise measures the size of the difference between actual and forecast profits. The latest figures update earlier earnings data, which showed an 82% beat rate and just 1. 9% aggregate upside at the end of October.

Corporate Earnings Grow 31. 4% Despite Wall Street Selloff Despite smaller earnings surprises, overall corporate profitability continues expanding rapidly. FactSet estimates blended S&P 500 earnings growth of 31.

4% year over year, up from 30. 1% a week earlier and 29. 1% at the end of September.

If confirmed, that would represent the third consecutive quarter of earnings growth exceeding 25%. All 11 sectors are reporting annual earnings growth, with energy, information technology and materials leading the expansion. Revenue results also remain strong, with 74% of companies beating sales forecasts and aggregate revenue exceeding estimates by 2.

1%. Nevertheless, AI stock valuations have contracted sharply as investors reassess the cost of expanding computing infrastructure. The divergence was particularly visible during October, when most S&P 500 stocks advanced despite heavy selling in major technology companies.

S&P 500 Valuations Fall as Investors Question AI Spending FactSet's latest figures show the S&P 500 trading at 17. 7 times expected earnings over the next 12 months, below its five-year average of 19. 8.

The multiple has fallen from 19. 0 at the end of September, indicating that investors are paying less for each dollar of expected future earnings. That repricing has coincided with renewed technology-sector selling and growing scrutiny of AI infrastructure financing.

For companies such as CoreWeave, elevated borrowing risks have further complicated investor expectations for future profitability. However, the smaller aggregate earnings surprise does not establish that corporate financial performance is deteriorating. Analysts still expect fourth-quarter S&P 500 earnings growth of 28.

4%, followed by approximately 33. 3% growth for the full year. Earlier Wall Street forecasts had already anticipated substantial profit expansion, leaving companies facing increasingly demanding expectations.