Expectations for earnings season had been lowered after President Trump’s “Liberation Day” announcement in early April, with many companies citing tariff and macro concerns before lowering projections for the remainder of 2025. Coming into the quarter, analysts only expected about 5% earnings growth, which would have represented the lowest growth for a quarter since 2023.
Q2 Earnings Beat Estimates
According to FactSet, S&P 500 earnings have grown 11.8% year-over-year, marking the third consecutive quarter of double-digit earnings growth. Revenues advanced 6.3%, the strongest pace since 2022, driven by strength in the Technology, Health Care and Communication Services sectors.With over 90% of the S&P 500 reporting, 81% have actual earnings over EPS estimates, which represents the highest “beat” rate since Q3 2023.
Strength has been broad based. Nine of the 11 sectors grew year-over-year, with only the Materials and Energy sectors experiencing negative growth.
Retail earnings were in focus this season as investors monitored the impact of tariffs on consumer spending.
Walmart reported its first earnings miss in 12 quarters but nonetheless raised its full-year EPS guidance despite warnings that tariffs might result in higher prices going forward.
Target, meanwhile, delivered earnings modestly above estimates. However, the company only maintained its full guidance, which was cut just a few months ago—much to the chagrin of Wall Street.
Ultimately, earnings have been positive, with some pockets of concern about the state of retail in the lower- to middle-class consumer.
Expectations for the remainder of 2025 and 2026 remain optimistic, with FactSet projecting 7.2% and 7.0% earnings growth for Q3 and Q4 2025 and 13.3% for full-year 2026.
