60% EPS significantly exceeded expectations, the largest revenue surprise in four years, this is the top ten highlights of US stock earnings reports to date

So far, 30% of companies in the US stock market have announced their earnings, with highlights summarized as follows:

1. Strongest Revenue Surprise in Four Years

According to SocGen, 84% of companies exceeded earnings per share (EPS) expectations, and 79% exceeded revenue expectations. In the past few years, earnings surprises were mainly driven by profit margin surprises, but this round of earnings reports saw the strongest revenue surprises in four years.

Goldman Sachs stated that the earnings reports easily surpassed the low thresholds set before the season: 60% of companies' EPS exceeded consensus expectations by more than one standard deviation (historical average 48%), while only 11% of companies' EPS fell below expectations by more than one standard deviation (historical average 13%).

2. Market Rationality Remains

Stocks that exceeded earnings expectations outperformed by 0.9%, while stocks that fell short of expectations underperformed by 1.5%, demonstrating a classic rational response.

3. Broader Profit Margin Expansion

The overall profit margin of the S&P 500 continues to rise, even after excluding the technology sector (see cover image).

4. Highest EPS Revision Ratio in Three Years

The EPS revision ratio reached 1.4, the highest in three years, meaning that for every 10 downward revisions, there are 14 upward revisions.

5. The US Leads

In the past 10 weeks, the EPS revisions of the S&P 500 have consistently led globally, outperforming global EPS 74% of the time over the past five years. Compared to benchmarks like Europe, the announced EPS is at a two-year high.

6. The Weakening Dollar and Tariff Hedging

A 10% depreciation of the dollar can bring a positive contribution of 4% to EPS, while a 10% tariff rate results in a negative impact of 3%. Improvements in the trade deficit and a weak dollar policy can coexist.

7. Industry and Style Divergence

The EPS and revenue of the communications and technology sectors exceeded expectations across the board; the materials and consumer sectors lagged. Quality and momentum styles are leading; value and small-cap styles are lagging.

8. Interest Rate Sensitive Sectors and Styles Continue to Lag

Waiting for the Federal Reserve's interest rate cut catalyst.

9. Enhanced Corporate Vitality

The S&P 500's per capita income reached a new high; capital expenditure/sales ratios have risen across sectors; leverage has dropped to the lowest level since 2014; buyback scale has grown by 16% over 12 months, and dividends have increased by 6%; M&A and IPO activities have moderately rebounded. Corporate signals indicate stable operations, with no signs of panic from a market peak yet.

10. Societe Generale's Outlook for the S&P 500

After the global fiscal policy shift, the "big picture" of structurally elevated nominal growth remains valid. The strong returns of the S&P 500 over the past three months confirm Societe Generale's optimistic view of the U.S. market, with the confidence crisis being merely a short-term phenomenon. Therefore, the S&P 500 is currently just "a few points" away from Societe Generale's target for the end of 2025. However, the Federal Reserve still has cards to play, and both a steepening curve and further weakening of the dollar pose upward risks. Additionally, the peak sentiment in the U.S. stock market is reflected in the "divergence" of index performance. Looking ahead, Societe Generale expects the S&P 500 to range between 5500–6750, with caution warranted only if it breaks through 7500 due to bubble risks.

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