Stock-price movements during earnings season cannot be judged solely by revenue and profit growth. We examine corporate earnings data, focusing on U.S. companies, to show how the difference between market expectations and actual results affects share prices.
As earnings releases from U.S. companies gather pace, the market is increasingly focused not simply on whether results are good or bad, but on the deviation from market expectations set in advance. This is why shares can fall even after strong results and rise despite declining earnings.
Although companies have shown a long-term tendency to beat market expectations more often, it is also important to note that the size of those beats has not increased significantly. Investors need to assess how far results exceeded market expectations and whether that outperformance will lead to future growth, while also interpreting the movement in the share price.
Over the past 10 years, the EPS of S&P 500 constituents exceeded market expectations in an average of 77% of cases, with actual EPS averaging 8.0% above market expectations. Over the most recent 4 quarters, the average excess beat reached 13.8%.
According to data published on 23 October 2026, companies reporting results for the July–September quarter accounted for 24% of the total, and 83% of those companies reported EPS above market expectations. Even when looking simply at the size of the beat, cases in which results significantly exceeded market expectations were uncommon, with the average beat limited to 2.1%.
Accordingly, it is important to consider not only whether earnings were good, but also the extent to which they exceeded expectations and the share-price level before the earnings release.