Q3 Earnings: Enter the Smaller Filers

We’re now roughly halfway through Q3 earnings season, and have more than doubled the number of firms in the famed Calcbench Earnings Tracker — more than 2,000 non-financial firms this week, compared to only around 900 one week ago. 

The bottom line this week: earnings growth is still decent, but aggregate growth has slowed down notably as more smaller firms start reporting their numbers. 

See Figure 1, below. It shows net income growth of 18.4 percent and operating income growth of 11.1 percent compared to the year-earlier period. 

Those performance numbers are good, certainly. But in our prior earnings update one week ago, with only 900 firms in the sample, net income growth was 28 percent and operating income growth was 20.2 percent. We can say the same for capex spending, too. One week ago the year-over-year growth was 27.7 percent; this week it’s 13.8 percent. 

So that’s three metrics that have nearly halved in one week, now that we’re including more small filers into the total sample. It’s a reminder that early-season comparisons can often be skewed by the smaller number of large firms. 

Capex in particular is a good example of what we mean. Why was the number so high one week ago? Because last week’s sample was weighted more heavily to tech giants spending zillions of dollars on data centers. This week we have 1,000 more companies, spending a lot less on capex, so aggregate year-over-year growth decelerated sharply. (This also means that if the AI giants do cut their capex spending bonanza, overall capex could easily turn negative, which is not good.) 

On the other hand, growth in revenue and cost of goods sold have essentially held steady (at 6.6 percent and 5.6 percent, respectively) despite the huge expansion in our sample size this week. So some of the biggest trends are still chugging along at a steady pace. 

Figure 2, below, shows all the latest numbers in table format. 

 

Calcbench tracks these earnings using our Earnings Tracker template, which pulls in financial disclosures as companies file their latest earnings releases with the Securities and Exchange Commission. The Earnings Tracker provides an up-to-the minute snapshot of financial performance compared to the year-earlier period.

If Calcbench subscribers wish to get their hands on the template we use for this analysis, so you can conduct your own experiments at home, use this link to the file. 

Please note that it will only work with an active Calcbench subscription. If you need an active subscription (and who doesn’t, really, when swift access to real-time data is so important?), contact us at us@calcbench.com.