The picture emerging from the Q4 earnings season is one of all around strength and momentum. Not only is an above average proportion of companies beating top- and bottom-line expectations, but estimates for the current period are also materially going up.

We are at the halfway mark in the Q4 reporting season for the S&P 500 index, with results from 251 index members already out and another 92 on deck to release results this week. We are not quite that further along in the reporting cycle for the small-cap S&P 600 index, with results from only 26% of the index’s members out.

We have a pretty good sense of the large-cap results already, with only retail and other consumer oriented operators still to report results. We will start seeing these consumer oriented reports week, with media operators like Disney (DIS - Free Report) , restaurant players like Chipotle (CMG - Free Report) and other consumer facing players like Michael Kors (KORS - Free Report) on deck to report results. We will know for sure only after seeing these quarterly results, but the odds are high that these consumer companies did as good in the last quarter of the year as we have been seeing from all the other sectors this earnings season.KORS

We will discuss details of the Q4 earnings season in detail below, but I want to focus on the very impressive revisions trend that we are seeing for the current and coming quarters.

Regular readers will recall that estimates for the Q4 earnings season had held up unusually better in the run up to the start of this earnings season. But what we are witnessing with estimates for the current and following quarters is extremely positive.

The typical pattern over the last few years has been that estimates for the quarter will start coming down as we will get closer to the reporting season for that quarter. The opposite is the case with the current (and following) quarter(s), with estimates starting to go up in a notable way. You can clearly see this in the evolving earnings growth expectations for 2018 Q1, as depicted in the chart below.

Full-year 2018 estimates are similarly going up, as the chart below shows.

Estimates for 2018 Q1 have gone up for 15 of the 16 Zacks sectors, with the Conglomerates sector as the only one whose estimates have come down. In terms of the dollar increase in Q1 estimates, the Finance sector takes the lead, followed the Energy, Technology, Medical and other sectors.

Q4 Earnings Season Scorecard (as of Friday, February 2, 2018)

Total earnings for the 251 S&P 500 members that have reported results already are up +16% from the same period last year on +10.5% higher revenues, with 80.5% beating EPS estimates and 78.1% beating revenue estimates. The proportion of companies beating both EPS and revenue estimates is 64.9%.

To put these results in a historical context, the charts below compare the results thus far with what we had seen from the same group of 251 index members in other recent periods.

Any way you look at these results, the Q4 earnings season is on track to be very good. Not only is growth tracking above what we had seen from the same group of 251 index members, but a record proportion are beating EPS and revenue estimates.

The comparison charts below highlight the very strong revenue momentum that’s coming out of the Q4 earnings season, a truly impressive performance.

Expectations for Q4 As a Whole

Total Q4 earnings are expected to be up +13% from the same period last year on +7.7% higher revenues. This would follow +6.7% earnings growth in 2017 Q3 on +5.9% growth in revenues.

The table below shows the summary picture for Q4, contrasted with what was actually achieved in Q3.

The chart below shows Q4 earnings growth expectations contrasted with what is expected in the following three quarters and actual results in the preceding 5 quarters. As you can see in the chart below, the growth pace is expected to pick up in Q4 after dipping in the preceding quarter and continue accelerating going forward.

The Small-Cap Scorecard

For the S&P 600 index, we now have Q4 results from 156 index members or 26% of the index’s total membership. Total earnings for these 156 index members are up +12.7% from the same period last year on +10.3% higher revenues, with 67.3% beating EPS estimates and 68.6% beating revenue estimates.

The charts below compare the results thus far with what we had seen from the same group of 156 index members in other recent periods.

The table below shows the blended picture, combining the actual results that have come out with estimates for the still-to-come companies, for Q4 for the small-cap index.

The chart below puts the small-cap index’s expected Q4 performance in the context of where growth has come from and where it is expected to go in the coming quarters.

Here is a list of the 482 companies including 92 S&P 500 and reporting this week.