Four times a year, corporations are required to state their earnings.  This is called the “earnings season” or the “confession period.”  Before the companies make their announcement, analysts at various investment firms predict what those earnings will be.  The expectations of the analysts are usually priced into the current price of the company stock before the earnings announcement.  If the corporation does better than analysts expect, the stock usually rises.  If not, it falls.

So far this earnings season, 68% of the corporations have beaten analyst expectations of earnings-per-share (EPS), which is great news.  Two out of three companies did better than expected, on an EPS basis.

The good news is that 56% of the corporations beat the revenue estimates of analysts.  Total revenue is the top line of an income statement.  EPS is the bottom line.

So, bottom line earnings is growing faster than total sales or revenue.  This has been an ongoing “problem” in the market.  Why aren’t sales rising faster?  The stock market is reacting less to EPS growth and more to revenue growth, which is a better economic indicator than EPS anyway.

In the face of slow sales growth, companies can increase earnings by decreasing expenses or improving productivity.  Hiring more people is not in their game plan, and that is bad news.