Analysis of the third quarter earnings season

The recent quarterly results of companies such as Gate, a leader in the cryptocurrency sector, and five other companies from the S&P 500 index corresponding to their respective fiscal quarters that ended in August, are considered part of our third quarter tally.

This week, seven other companies in the S&P 500 are scheduled to report their results, including Costco, Accenture, and others. By the time major financial institutions release their quarterly reports on October 14, we will have seen the first results of the third quarter from nearly two dozen members of the S&P 500.

Later in this analysis, we will discuss the current expectations for Costco and Accenture, but first we will review the overall expectations for the third quarter for the S&P 500 index as a whole.

It is expected that third-quarter earnings will increase by +5.1% compared to the same period last year, with revenues up by +6%. This would follow earnings growth rates of +12.5% and +12.3% in the second and first quarters of 2025, respectively.

In the unlikely event that the actual growth of earnings for the third quarter for the S&P 500 index turns out to be +5.1%, as is currently expected, this would be the lowest earnings growth rate for the index since the growth rate of +4.4% in the third quarter of 2023.

We have been regularly pointing out in recent weeks that the trend of revising estimates has been positive since the end of April, after remaining under pressure in the months leading up to that point. You can see this in the chart below that shows how the earnings growth expectations for the third quarter of 2025 have evolved in recent weeks.

Since early July, third-quarter earnings estimates have increased for 5 of the 16 Zacks sectors, which include the Technology, Finance, and Energy sectors.

While third quarter estimates for the remaining 11 sectors have been under pressure, the favorable trend of revisions for the Technology and Finance sectors is more than enough to offset their effect on index-level aggregate trends, as these two sectors alone account for more than 50% of the index's total earnings.

On the negative side, estimates for 11 of the 16 Zacks sectors have been under pressure since the beginning of the quarter, with notable declines in the Medical, Transportation, Basic Materials, and Consumer Staples sectors, among others.

The technology sector, which has been a prominent driver of growth in recent quarters, is expected to continue playing that role in the third quarter of 2025, with an expected increase in total sector earnings of +11.8% on +12.5% higher revenues. If it weren't for the strong contribution to growth from the technology sector, the total earnings growth of the S&P 500 for the third quarter would only be +2% ( instead of +5.1% otherwise).

As mentioned earlier, the third quarter estimates for the technology sector have shown an upward trend since the beginning of the quarter, although they have slightly decreased in recent days, as shown in the chart below.

Key earnings reports of this week

We have more than 30 companies scheduled to report results this week, including seven members of the S&P 500. In addition to Accenture and Costco, notable companies reporting this week include Micron Technologies, AutoZone, CarMax, and others.

The sentiment towards Accenture's shares has been pessimistic lately, with the stock losing -32.2% of its value so far this year, lagging behind its peers and the overall market by large margins. What drives the negative sentiment about Accenture is a combination of flat IT spending trends outside of AI-focused spending and the threat of disintermediation for the company's business resulting from AI.

Accenture is expected to earn $2.98 per share with revenues of $17.3 billion, representing year-over-year changes of +6.8% and +5.6%, respectively. Estimates have been stable lately but have modestly decreased since the beginning of the period.

Costco's shares have lost ground recently, with a +4.4% increase this year, lagging behind Walmart's +13.6% increase and the S&P 500's +13.8% increase. The stock's underperformance relative to Walmart began around July and has persisted since then. A possible explanation is the competitive challenge posed by Amazon's announcement of same-day delivery for grocery items, but we will see if the quarterly report, scheduled for after the market close on Thursday, September 25, serves as a catalyst.

The expectation is that Costco will report earnings of $5.81 per share with revenues of $86.14 billion, representing year-over-year changes of +12.8% and +8.1%, respectively. The trend of revisions has been moderately negative lately, with estimates for next year (the fiscal year ending in August) down in the last two months.

The overall picture of earnings

In terms of 'EPS' of the S&P 500 index, these growth rates are approaching $257.80 for 2025 and $290.29 for 2026.