Third Quarter Earnings Are In Full Swing (Unlike The Cubs)!

Just like we watched our beloved Chicago Cubs inch out wins during the playoffs, quarterly corporate earnings keep us watching with anticipation.

Corporate earnings are reported each calendar quarter and provide us with insight to how a company is operating. The earnings number represents how profitable the company was in that quarter, usually stated on a per share basis. Analysts create estimates for how they think companies are performing which can drive how a stock trades leading up to their earnings report. And things like natural disasters, holiday seasons, and consumer product trends can drive how a company performs each quarter.

So far in the first weeks of earnings for the third quarter, company profits have come in higher than expected. You can follow along with these reports as they progress at the dashboards below.

Why do corporate earnings matter?

According to Thomson Reuters, we have seen so far this quarter:

  • Of the 32 companies in the S&P 500 that have reported earnings to date for Q3 2017, 84.4% have reported earnings above analyst expectations. This is above the long-term average of 64% and above the prior four quarter average of 72%
  • 81.3% of companies have reported Q3 2017 revenue above analyst expectations. This is above the long-term average of 60% and above the prior four quarter average of 56%.

This data is important because it proves what we think is happening with regards to company performance. Analysts can make estimates, but until these are proven true or accurate, we aren’t able to gauge the health of the economy. Companies have to continue performing with increasing profits to prove that our economy is strong.

It is also natural as corporate earnings are announced to see increased volatility in individual stock prices. An earnings announcement is a “moment of truth” to see if what we think is really true. So during these weeks of earnings it isn’t uncommon to see stock fluctuations higher and lower as earnings are released.

We will continue to watch as we gain insight into how our economy is moving forward. And, just like Cubs fans, we always hope for good results.