Earnings Estimates Keep Increasing: A Closer Look

Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>

Here are the key points:

The Q4 earnings season is off to a solid start, with the growth pace accelerating and most management teams painting a stable-to-positive outlook for their businesses. Companies are comfortably beating consensus estimates, with the Q4 EPS and revenue beats percentages tracking above historical averages.

Favorable management commentary is helping estimates for 2026 Q1 and beyond to go up. This positive revisions trend is particularly notable for the Finance sector at this stage, but estimates are also trending higher for the Tech, Retail, Construction, and Transportation sectors.

Total earnings for the 51 S&P 500 members that have reported Q4 results are up +17.2% from the same period last year on +7.5% higher revenues, with 88.2% beating EPS estimates and 72.5% beating revenue estimates.

For the Finance sector, we now have Q4 results from 42.8% of the sector’s market capitalization in the S&P 500 index. Total earnings for these companies are up +13.9% from the same period last year on +7.0% higher revenues, with 90.5% of the companies beating EPS estimates and 71.4% beating revenue estimates.

Finance Sector Earnings Estimates Rise

The market’s reaction to results from JPMorgan JPM, Bank of America BAC, Citigroup C, and others suggests a disappointing performance from these banking leaders. We don’t think the banks’ Q4 results or comments about the outlook are negative and see these stocks’ post-release weakness in a ‘sell-the-news’ type of framework, particularly after their recent outperformance.

Citigroup shares have been particularly hot over the past year, outperforming its peers and the broader market as investors gain more confidence in the new management team’s restructuring and repositioning plans. Market participants had been justifiably skeptical earlier, as Citigroup appeared unable to turn its fortunes around over the years. Unlike Citigroup, JPMorgan shares benefited from its reputation for operating excellence and industry leadership.

We should keep in mind, however, that Citi, Bank of America, and JPMorgan shares had been losing ground since the start of the New Year, with the Q4 earnings results adding to the downtrend.

The chart below shows the one-year performance of JPMorgan, Citigroup, and Bank of America shares relative to the S&P 500 index.