The latest report from Fact Set indicated that 16% or 82 companies listed in the S&P 500 already reported their actual Q3 earnings results as of October 17.

The firm stated that 68% out of the 82 companies reported Q3 earnings per share (EPS) that exceeded consensus expectation. Thirty two percent (32%) reported actual EPS below the mean EPS estimate. The percentage was lower than the recent historical averages—73% for 1-year and 73% for 5-year average.

Q3 earnings 2014

Fact Set also noted that 63% posted better than expected sales for the third quarter, which was above the recent historical averages.

Q3 earnings surprises

According to the firm, the combined Q3 earnings growth rate of 5.1% year-over-year was higher than the 4.6% estimated earnings growth rate by the end of September. The upside was due to upside earnings surprises by companies in the financial sector.

Q3 earnings growth rate

Fact Set noted that the companies that reported Q3 earnings surprises recorded an average 1.5% increase in price from two days prior and after the release of financial results.  The firm also observed that companies in the S&P 500 posted upside earnings surprises over the past five years achieved an average of 0.9% increase in price.

Meanwhile, the companies that reported Q3 earnings downside suffered an average 2% decline in price during the period. Companies in the index that posted downside earnings recorded an average 2.4% drop in price over the past five years

Combined Q3 sales growth rate

Out of the 82 companied that already released 3Q earnings results, 63% posted actual sales higher than estimates while 37% reported lower than expected sales. The percentage of companies reporting better than expected sales performances exceeded the 58% 1-year average and 59% 5-year average.

Q3 revenue above below inline

According to Fact Set, the combined 3.6% sales growth rate for the third quarter was lower than the estimated 3.8% by the end of the period year-over-year. The downside was caused by the downward revisions to the revenue estimates for companies in the energy sector, which is the only sector reporting the most revenue decline.

q3 revenue growth rate

The firm indicated that nine sectors are reporting or expected to post revenue growth for the quarter. The health care sector is reporting the highest sales growth rate for the period.

Currently, the companies reporting sales reported a surprise percentage of 0.8% higher than the 0.7% 1-year average and 0.6% 5-year average.

Companies in the materials (+4.6%) and financial (2.1%) sectors are recording the largest aggregate differences between actual and estimated sales. On the other hand, companies in the industrial sectors are experience the biggest drop in aggregate differences between actual and estimated sales for the quarter.

Issues likely monitored during the Q3 earnings season

Fact Set suggested that the market will possibly watch the comments of companies about various issues in China, Europe and United States during the Q3 earnings season. These issues include the impact of the U.S. dollar, lower oil and gas prices and geopolitical risks on earnings and revenue during the period.

Q3 earnings season issues discussed by companies

JPMorgan Chase & Co (NYSE:JPM) recently commented the U.S. economy is “showing signs of steady improvement” while challenges remain in the global economic recovery. The bank emphasized, “Corporate America is in good shape with strong balance sheets and employment trends continue to be positive.”

On the other hand, Baxter International Inc. (NYSE:BAX) commented that Western Europe is clearly the softest area globally. The company perceived “less robust demand” in Europe.

Meanwhile, Alcoa Inc (NYSE:AA) commented that China, Asia “might be a little slower, but still going very, very strong.”

When it comes to the strength of the U.S. dollar, Johnson & Johnson (NYSE:JNJ) commented that foreign exchange translations could result to an unfavorable impact of 4% on its full year core EPS growth this year based on the current  foreign exchange market consensus.