The Q2 earnings season has turned out to be a lot better relative to what the market feared. The proportion of companies beating Q2 consensus estimates has been on the lower side relative to what we have become used to seeing in recent periods, particularly during the Covid period. But the beats percentages are nevertheless within the historical range, though admittedly towards the lower end of the spectrum. Importantly, the fear of all-around negative guidance has not come to fruition. While some companies did guide lower, most either reiterated guidance or actually raised their outlook. On the revisions front, estimates for Q3 and beyond have come down, but are not indicative of a major economic downturn. The following points spotlight the three key takeaways from the Q2 earnings season. , most companies beat consensus EPS and revenue estimates, though the beats percentages have been relatively on the lower side. First For the 433 S&P 500 members that have reported Q2 results through Friday, August 5, earnings and revenues are up +7.7% and +15.4%, respectively from the same period last year, with 77.4% beating EPS estimates and 69.3% beating revenue estimates. The comparison charts below put the Q2 EPS and beats percentages in a historical context. Image Source: Zacks Investment Research The 77.4% EPS beats percentage is the lowest for this group of 433 index members since the first quarter of 2020. That said, the beats percentage is only modestly below the 78.2% average for the last 5 years (preceding 20 quarters). , estimates for the current period (2022 Q3) have come down in recent weeks, with the current +2.9% earnings growth rate down from +8.1% in mid-June, as the revisions chart below shows. Second Image Source: Zacks Investment Research Aggregate Q3 earnings estimates have declined -4.6% since mid-June, with 13 of the 16 Zacks sectors suffering negative revisions and three sectors enjoying positive revisions. Estimates have come down the most for the Consumer Discretionary, Consumer Staples, Conglomerates and the Technology sectors. On the positive side, estimates have gone up for the Energy, Autos and Utility sectors. The positive revisions trend for the Energy sector has been a persistent feature of the overall earnings picture in recent periods. In this respect, the Q3 revisions trend is consistent with what we had been seeing in other recent periods as well, with higher estimates for the Energy sector offsetting cuts elsewhere. That said, Q3 estimates outside the Energy sector have dropped relatively more than what we saw ahead of the Q2 earnings season. The chart below shows the 2022 Q3 revisions trend on an ex-Energy basis. Image Source: Zacks Investment Research , aggregate Q2 earnings for the S&P 500 index are on track to reach a new all-time quarterly record, as the chart below shows. Third Image Source: Zacks Investment Research The big contributing factor to the record earnings haul in Q2 is the blockbuster Energy sector results, as you can see in the chart below. Image Source: Zacks Investment Research This Week’s Docket Through Friday, August 5, 433 S&P 500 members or 86.5% of the index’s total membership, had reported Q2 results. We have another 25 index members on deck to report results this week, including Ralph Lauren ( RL Quick Quote RL - Free Report) and media players like Disney ( DIS Quick Quote DIS - Free Report) , News Corp. ( NWS Quick Quote NWS - Free Report) , Fox Corp. ( FOX Quick Quote FOX - Free Report) and others. Please note that while the Q2 reporting cycle is entering its final phase for these large-cap operators, plenty of small- and mid-cap players have yet to report quarterly results. The total number of companies scheduled to report results this week is more than 900, with most in that small- and mid-cap category. The Current Earnings Backdrop The chart below shows current expectations (and actuals) on a quarterly basis. Image Source: Zacks Investment Research The +6.2% earnings growth in 2022 Q2 on +13.8% higher revenue is the ‘blended’ picture for the quarter, meaning this growth rate represents the actual results from the 433 index members and estimates for the still-to-come companies. Excluding the strong contribution from the Energy sector, Q2 earnings drops from growth to a decline of -4.1%. The chart below presents the earnings picture on an annual basis. Image Source: Zacks Investment Research As we saw earlier in the context of estimate revisions for Q3, a similar downward adjustment is underway for the full-year estimates as well. But growth is still expected to be positive next year and the year after, hardly a recessionary outlook.