Written by: Angela Akers

Second quarter earnings season began last Friday in typical fashion with JPMorgan Chase, Citigroup and Wells Fargo releasing earnings first. The good news, all beat expectations on both the top and bottom lines. The bad news, net interest income, a measure of lending profits, fell for both Citigroup and Wells Fargo. Other companies followed with releases, as earnings season kicked into full swing, and we continued to see both good and bad news.

I’m optimistic that there will be more good news than bad as there has been for the last several quarters. I’ll explain why. Let’s turn our eye to the three aspects of earnings that VectorVest tracks which looks to the future, i.e. reflecting leading earnings, not trailing.

EPS Level. VectorVest’s EPS figure is a leading 12-month EPS that is determined by using a combination of 12-month trailing earnings performance and the most current earnings forecasts. Looking at the 1yr S&P500 WatchList Average Graph, showing Price and EPS. (To access this graph, please click on the Viewers tab, then WatchList Viewer, then click on the S&P WatchLists folder, select S&P500 then right click on the WatchList Average row and click on View WatchList Average Graph). We can see that the forecasted EPS currently stands at its 1-Yr high of $10.09. EPS information is updated daily, so today’s VectorVest EPS is reporting forecasted earnings for July 19, 2025.

EPS Growth Rate. GRT reflects a one to three year forecasted earnings growth rate in percent per year. Remove EPS from the S&P500 WatchList Average Graph and add GRT, there you see that earnings growth stands at 9% currently. Incidentally, it was also at 9% 1-Yr ago, in-line with the growth that FactSet is reporting for Q2.

EPS Trend. For the EPS Trend, we’ll turn to our Market Climate Graph and see what our Earnings Trend Indicator, ETI, has done. (To access this graph, please click on the Graphs tab. In the upper left corner of the graph, click on the dropdown to the right of Stock and select Market Climate. Click on Add Parameter on the upper right side of the graph and select 50 MA EPS and ETI (make sure to check the boxes beside these selections)). The ETI is a slow-moving indicator and has moved from a level of 1.01 to a level of 1.10 over the past year. We know that earnings are the engine that drives stock prices higher and the VectorVest ETI confirms the earnings trend. An ETI reading above 1.00 means that earnings are still trending higher, overall.

But don’t just take it from us. In a recent article, FactSet reported a projected earnings growth of 9.3% for the S&P500 for the second quarter and also reported that the actual earnings growth rate has exceeded the estimated earnings growth rate in 37 of the last 40 quarters.

Hence, according to VectorVest, and FactSet for that matter, Q2 should be relatively positive, despite continued high interest rates and lingering inflation. While this is positive news, as investors, we must stay informed, that’s one of the characteristics of a successful investor. So, continue to take advantage of the resources that you have in the software and use the Events Viewer, it will tell you when the stocks you own, or stocks that you want to buy, are set to report earnings so that you can make informed decisions and take appropriate action when necessary. If you believe that one of the companies that you own is at risk for an earnings miss, you can take defensive action, such as selling Covered Calls or buying Puts.

Let VectorVest help guide you so that you can always Be Prepared For Earnings Season.

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