Earnings Season is Here: Why this year is potentially the flip side of last year

What earnings season means and why it matters

Four times a year, big US companies report how much money they made. Investors watch closely because these results move stock prices. The reporting window that just started covers April - June 2026.

The unusual thing happening this year

Normally, before companies report, the analysts who forecast profits quietly lower their predictions. It's a safe move. This year, they did the opposite; they raised them. That almost never happens! The last time was back in 2021.

Think of it like a high jump. When the bar is set low, it's easy to clear it and impress people. This year, analysts set the bar high on purpose. So even if a company does well, it might not be enough to surprise anyone or push the stock up, because good results are already expected and are priced in.

The overall forecast is strong: company profits are expected to be about 23% to 24% higher than a year ago, the seventh quarter in a row of solid growth. Sales are expected to rise across every part of the market, too.

Now compare it to a year ago

Last winter, analysts did the normal thing: they lowered their expectations before companies reported. So the bar was low. Companies then easily beat it, and about 8 out of 10 did better than expected. Profits ended up around 12% higher than the year before; low bar, strong results, happy market.

So is this year the same as last year? Not really. Might be the reverse.

The profit growth looks similar on the surface, but the starting point is opposite, and that's the key:

●     Last year, the bar was low, so beating it was easy, and stocks rose. This year, the bar is high, so simply meeting expectations may not be enough to lift stocks.

●     Stocks are more expensive now.

●     Different parts of the market are doing the heavy lifting. Last year, tech giants drove most of the growth. This year, two areas stand out: energy companies, because oil prices are much higher than a year ago and technology, especially the chipmakers powering artificial intelligence, whose profits are expected to more than double.

What to keep an eye on

Because expectations are already high, investors will look past just the profit number and pay attention to three things:

Last year, investors were rewarded because expectations were low and results came in strong. This year it's harder. The results look genuinely good, but expectations and prices are already high, so a lot of the good news is already reflected in stock prices. The early reporters, big banks, will set the mood. Good numbers give the market some breathing room. Weak ones could signal that investors are leaning too heavily on a few winners to carry everything.

Disclaimer:
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** This article was prepared by BROKSTOCK analyst Maboko Seabi