Q3 Earnings Have Smashed Expectations so Far But Investors are Unimpressed

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Corporate earnings have far exceeded analyst expectations, but skeptical investors are looking for more.

Corporate earnings have far exceeded analyst expectations, but skeptical investors are looking for more, according to MarketsInsider.

FactSet data released last Friday revealed that 64 percent of companies in the S&P 500 have reported third-quarter earnings, with 86 percent of those companies beating expectations. Over the past five years, only 73 percent of companies beat expectations. FactSet also reported that the earnings beats are 19.3 percent greater than estimates, far greater than the 5-year average of 5.6 percent.

The Communication Services, Energy, Industrials, and Consumer Discretionary sectors have reported the strongest earnings. 81 percent of companies in the S&P 500 reported positive revenue in their third-quarter earnings report. However, all is not good. Earnings are still down 9.8 percent YoY amid the pandemic. Investors are concerned that this trend could reverse or slow due to a rise in COVID cases and cold weather impacting US business.

"Companies that have reported positive earnings surprises for Q3 2020 have seen an average price decrease of -1.7% two days before the earnings release through two days after the earnings release," FactSet stated.

Analysts expect earnings to decline 11.2 percent in the fourth quarter if the trend continues.

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