S&P 500 Earnings Beats Are the Smallest in Four Years, FactSet Says
Direct answer
Most big US companies beat profit forecasts in the third quarter of 2026, but only just. FactSet reported on November 6 that 84% of S&P 500 companies topped earnings estimates, yet the average beat was only 2.7%. That is the smallest margin since the fourth quarter of 2022, and it is well below the five year average of 7.5%.
What happened
FactSet published its weekly Earnings Insight update on November 6, 2026, with 88% of S&P 500 companies having reported results for the third quarter. The numbers tell two stories at once.
First, the beat rate is high. Of the companies that reported, 84% posted earnings per share above Wall Street estimates, and 74% beat revenue estimates. Both figures are above their five year averages.
Second, the size of the beats is small. In total, companies reported earnings just 2.7% above estimates. That is below the five year average of 7.5% and the ten year average of 8.0%. If 2.7% holds as the final number for the quarter, it will be the lowest earnings surprise since the fourth quarter of 2022, when companies beat estimates by only 1.3%.
The overall profit picture is still strong. FactSet estimates blended earnings growth of 31.4% from a year earlier, up from 30.1% a week earlier and 29.1% at the end of September. Revenues came in 2.1% above estimates. The health care sector reported the largest positive surprise, at 13.7% above estimates.
Valuations also look calmer than usual. The S&P 500 trades at 17.7 times expected earnings over the next 12 months, below the five year average of 19.8 and the ten year average of 19.1.
The update came after a rough week for stocks. The S&P 500 fell 2.7% in the week ending November 6, its worst week since April 2025, as worries about heavy AI spending hit technology shares. Even so, companies that missed estimates were punished less than usual, with an average share price drop of 1.1% around their results.
For the rest of the year, analysts expect fourth quarter earnings growth of 28.4% and full year 2026 growth of 33.3%.
Why it matters for beginners
An earnings surprise is the gap between what a company actually earned and what analysts expected. A high beat rate sounds good, but the size of the gap matters more. When most companies beat by a tiny amount, it means profits are strong but not much better than the market already expected. That is why strong earnings growth of 31.4% did not stop stocks from falling last week. Investors had already priced in a lot of good news.
The valuation number matters too. A forward price to earnings ratio of 17.7 means investors are paying about 17.7 dollars for each dollar of expected profit over the next year. Because that is below the recent averages, stocks look less expensive than they did a few months ago, even after a sharp sell off.
If you follow the US market through an index fund, this is the kind of report that shapes the whole market. Most S&P 500 companies beating forecasts is a healthy sign, but a thin margin of victory means there is little room for disappointment in the next round of results. Read our beginner guide to what an index fund is and why beginners use it to see how one fund can hold all 500 of these companies at once.
What to watch next
About 12% of S&P 500 companies still have to report third quarter results. Cisco and Applied Materials report this week, and Nvidia, the last of the big seven tech companies to report, is due on November 17. Watch whether the final surprise number stays near 2.7% or slips lower, and whether companies give cautious guidance for the fourth quarter. The US inflation report due on Tuesday, November 10, will also shape expectations for the Federal Reserve, after strong jobs data pushed traders to price in a higher chance of a December rate rise. For the earlier stage of this earnings season, see our report on how S&P 500 earnings surged in Q3 as most companies beat forecasts.
FAQ
What is an earnings surprise?
It is the difference between a company’s actual profit per share and the average forecast from Wall Street analysts. A positive surprise means the company earned more than expected.
What does blended earnings growth mean?
FactSet blends the actual results of companies that have already reported with the estimates for companies that have not yet reported. The 31.4% figure is that mix for the third quarter.
What is a forward price to earnings ratio?
It divides the current share price by expected earnings per share over the next 12 months. A lower number means investors are paying less for each dollar of expected profit.
Why did stocks fall if earnings grew 31%?
Because the market had already expected strong growth. Prices move on surprises, not on good news alone. When beats are only 2.7% above forecasts, there is little new reason for prices to rise, and worries about AI spending were enough to push shares down.
Where do these numbers come from?
FactSet published the figures in its Earnings Insight report on November 6, 2026, and the same numbers were reported in market coverage of the FactSet update on November 8 and 9.
Sources
FactSet, Earnings Insight, November 6, 2026: https://insight.factset.com/sp-500-earnings-season-update-november-6-2026
FactSet, Earnings Insight report (PDF), November 6, 2026: https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_110626.pdf
This article is for general information and education only. It is not legal or financial advice.
