Corporate earnings season is the roughly six-week time period when the majority of U.S. companies release their financial results for the prior quarter. For most companies, this will be the January-March first quarter. The fundamental driver of a company’s stock price is its ability to generate revenues and profits. Thus, each company’s profits, sales and revenues, among other data, are brutally dissected by Wall Street to justify the current price of the company’s stock.
As of Thursday, 439 of the companies within the S&P 500 index have reported their first-quarter earnings. The S&P 500 is the benchmark stock index for the 500 largest U.S. corporations. According to financial tracking provider Refinitiv, 87% have reported better-than-expected earnings, on pace for the highest rate on record dating back to 1994. On average, corporate earnings have increased by 51.2% over the past 12 months, more than double the April 1 forecast of just 24.2%.
Of the 11 sectors that make up the U.S. economy, the Consumer Discretionary sector has reported the highest 12-month earnings growth rate. This sector consists of non-essential products, including cars, apparel and leisure and hospitality goods and services. To date, first-quarter earnings for Consumer Discretionary companies have soared 188.8%. Rounding out the Top 5 are Financials (+137.8%), Materials (+62.2%), Communication Services (+50.1%) and Technology (+43.6%). The Industrials sector, which includes manufacturing and construction companies, currently ranks 11th, in last place, with earnings growth of just 0.7%.