In a market filled with doom and gloom, finding positive surprises in the S&P 500 is all the sweeter. And there's plenty of them.
Seven companies in the S&P 500, including communication firm T-Mobile US, real estate play American Tower and industrial General Electric, just reported second-quarter profit that topped estimates by more than 40%, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's an astounding surprise that's much needed when S&P 500 investors are preoccupied with recession, inflation and global tensions.
"U.S. stocks rallied after a steady dose of impressive earnings and economic data," said Edward Moya, strategist at Oanda. "The economy doesn't look bad at all after strong earnings."
Low Expectations For S&P 500 Profit
More than 350 companies in the S&P 500 have reported their results for the second-quarter so far. And so far, they're not as bad as most investors feared coming into earnings season.
Second-quarter earnings growth for the S&P 500 is coming in at roughly 6%, says John Butters of FactSet. That's on track to be the S&P 500's lowest profit growth since it grew by 4% in the fourth quarter of 2020.
But it's all about the surprises. Nearly three-quarters of S&P 500 companies to report profit earned more than expected, Butters says. That's below the 77% of companies that usually do. And for most S&P 500 companies, the surprises are smaller than usual. Additionally, they're only beating by 3.1%. That falls short of the 8.8% typical surprise.
Still, there have been some massive surprises.
T-Mobile US Dials Up Giant Surprise
If you're looking for an S&P 500 that's doing much better than anyone saw coming, it's T-Mobile US. The telecom carrier's second-quarter profit came in 424% higher than expected.
In some ways, the fact T-Mobile US' profit surprised on the upside is more of the rule than the exception. The company's profit topped bottom-line estimates in every quarter since 2015. But it's the magnitude of the beat in the second quarter that's unusual.
The company's quarterly profit of $1.94 a share absolutely smashed the estimate calling for a profit of 37 cents a share. And it's not completely missed by investors. Shares of T-Mobile are up 7% in the first few days of August. And they're up more than 24% this year.
Other Big Profit Surprises
T-Mobile is the master of positive surprises. But it's not alone, at least in the second quarter.
Cellphone tower rental company American Tower, which hosts some of T-Mobile's wireless bandwidth, is another big winner. The company reported a second-quarter profit of $1.95 a share in the second quarter. That topped views by 103%. Investors got in slightly ahead of the report, driving the stock up 5.2% since July.
And another surprising surprise came from struggling industrial firm GE. Despite the company's travails all year, leading to a 20% drop for the stock this year, the company's second-quarter profit of 78 cents a shares topped views by nearly 86%. And that's been a boost the stock needed. Shares are up nearly 18% since July.
So while it's true S&P 500 investors have lots to worry about, there's good news, too.
Biggest S&P 500 Profit Surprises
All topped in the second quarter
| Company Name | Ticker | Earnings per share Q2 surprise | Sector |
|---|---|---|---|
| T-Mobile US | 424.3% | Communication Services | |
| American Tower | 103.1 | Real Estate | |
| General Electric | 85.7 | Industrials | |
| Kimco Realty | 60 | Real Estate | |
| Ford Motor | 51.1 | Consumer Discretionary | |
| Electronic Arts | 46.4 | Communication Services | |
| The Hartford Financial Services Group | 41.4 | Financials |
