The phrase “The opera ain’t over till the fat lady sings” is usually attributed to late San Antonio sports writer and broadcaster Dan Cook. Although some believe a Texas Tech sports information officer coined the phrase.

It’s a variation of the Yogi Berra expression, “The game isn’t over till it’s over.” The late New York Yankees’ Hall of Famer was also famous for malapropisms. No matter.

In the case for stocks, based on record revenues and earnings, and a number of other factors, the opera ain’t over and the fat lady may not be warbling for a while.


by Dr. Ed Yardeni, President, Yardeni Research

They say that the opera ain’t over until the fat lady sings.

The opera ain’t over for the bull market in stocks, but it’s hard to imagine the year-over-year (y/y) growth rates in S&P 500 revenues per share and operating earnings per share will beat Q2’s 18.5% and 87.7% anytime soon.

Both revenues and earnings rose to new record highs during Q2. We are particularly impressed by the S&P 500’s profit margin, which set yet another record high, of 14.0%, during Q2.

Here’s more:

(1) Record number of beats. Q2’s positive and negative revenues surprises were 86.7% and 13.3%, the most and the least since the start of the data in 2009.

Q2’s positive and negative earnings surprises were 87.1% and 9.8%, also the most and the least since the start of the data in 1987.

(2) Significant upside surprises. Q2’s revenues beat expectations by 5.2%, the most on record. The earnings beat was 16.9%, marking the fifth quarterly double-digit beat, which is unprecedented.

(3) Sector beats. Here are the latest realized y/y earnings growth rates during Q2 for the S&P 500 and its 11 sectors and the growth rates that were expected at the start of the Q2 earnings season:

  • S&P 500 (87.7%, 60.5%)
  • Communication Services (73.1, 39.8)
  • Consumer Discretionary (356.3, 270.9)
  • Consumer Staples (19.8, 10.1)
  • Energy (244.4, 225.5)
  • Financials (156.7, 100.3)
  • Health Care (26.0, 10.8)
  • Industrials (678.1, 568.5),
  • Information Technology (48.1, 31.6)
  • Materials (139.2, 115.2),
  • Real Estate (39.1, 24.7)
  • Utilities (12.7, -0.9)

(4) Widening profit margins. Here are Q2’s profit margins for the S&P 500’s 11 sectors from highest to lowest:

  • Real Estate (31.3%)
  • Information Technology (25.0)
  • Financials (22.3)
  • Communication Services (18.6)
  • Utilities (15.7)
  • Materials (14.9)
  • S&P 500 (14.0)
  • Health Care (11.7)
  • Industrials (9.2)
  • Consumer Discretionary (8.0)
  • Consumer Staples (7.9)
  • Energy (6.9)

Five of the sectors were at record highs.

(5) The beat goes on.

Our weekly series for S&P 500 forward revenues, forward earnings, and the forward profit margin all rose to new record highs in early August, suggesting that Q3 will also be a record-setting quarter for the S&P 500.

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