“Back to normal.” Earnings seasons are back to normal.

That’s according to Goldman’s David Kostin who, to reiterate my usual compliment, is good at his job. I can be hard on sell-side research notes (as distinct from sell-side trading desk notes, of which I’m admittedly a super-fan), but it’s important to keep perspective.

The general investing public tends to misconstrue the voluminous macro content and top-down equity analysis generated by sell-side research teams. The public will be forgiven: After all, when you use the word “target” to describe your best guess for where a benchmark equity index will be in nine months, laypeople will assume “target” means target, in the same way they assumed “transitory” meant “temporary” when economists reassured on inflation three years ago.

And look, “target” does mean “target,” but you have to take top-down equity research with a grain of salt. There isn’t a PM on planet Earth who gets a year-end SPX price target update from the research side at a sell-side firm and says, “Oh, Savita sees SPX 6,400 now, I’m telling my traders to buy SPY hand over fist.” This is the great irony of top-down sell-side equity research: The only people who think it’s actionable are retail investors and the media, which is to say the people for whom it isn’t written.

The folks for whom that content is written know what to do with it, which is to say they know to click the box next to the sender’s name then click “Archive.” I’m kidding! I’m kidding! Lighten up, rat-racers. I like being on your distribution lists.

In all seriousness, top-down sell-side equity research is good for informational purposes. They tally a lot of numbers and run sophisticated versions of the models you forgot how to run the second you realized your MBA’s useless because it didn’t come from an Ivy League program. They then present those numbers and the model output in a way that’s aesthetically pleasing, unless you’re Mike Wilson in which you case you use blurry Bloomberg screengrabs with the color scheme inverted so that one line’s urine-yellow. (I’m on a roll, folks. I’ll be here all week).

To the extent you find it valuable to see a lot of numbers you wouldn’t have bothered crunching crunched and assuming you can tolerate the driest prose ever committed to a page, top-down equity strategy pieces are useful, and as that stuff goes, Kostin’s the “best.” He’s not going to waste your time, he’s going to spell out what he’s trying to say very succinctly, his charts are professional and easy to look at, and he understands the only thing you need to understand to keep that job: When the S&P’s going higher, you just raise your damn price target, because the only time anyone cares about those “targets” being “wrong” is when they’re too low for too long because somebody’s trying to be a hero.

In his latest, Kostin summed up Q3 earnings season in the US. It went ok. About average, actually. “One way to characterize the Q3 reporting season is ‘back to normal,'” he said, noting that “the frequency of earnings beats,” defined as the share of S&P companies beating by at least one standard deviation, was 51%. As the figure on the right, below, shows, that’s right at the long-term average. For the better part of two years, that metric ran close to 60%.

The figure on the left is just a helpful summary of Q3 results by sector. Overall aggregate EPS growth was 8%.

It’s not just beats and misses that’ve normalized, it’s also the trajectory of revisions. As some of you are doubtlessly aware, forward-looking, annual profit forecasts tend to be cut by around 5% over the course of a given year, but 2024 wasn’t cooperating with historical experience. “During the first eight months, analysts lowered 2025 EPS estimates for the S&P 493 by 1%, but a 14% upward revision to estimates for the Magnificent 7 kept aggregate S&P 500 EPS forecasts stable,” Kostin remarked.

The figure on the left, below, is quite something, and it speaks to what I said above about Kostin: He’s not going to waste your time. Are you going to get anything profound out of him? No. You might not even get anything you didn’t already know, at least intuitively, but you’re always going to get some charts that make you say, “Ok, these were worth the 10 minutes I spent reading” and in a world where everyone’s wasting everyone else’s time, anyone who doesn’t waste your time is someone you should thank. (You’re welcome.)

What you’re looking at on the left is a steady increase in projected Mag7 EPS more than offsetting a decrease in projected “SPX 493” earnings, resulting, until very recently, in a slightly upward-sloping aggregate S&P 500 revisions trajectory. Kostin’s point is that Q3 results saw that trajectory (for the index) slip back to basically unchanged. “During the past two months, the typical modest downward pattern has re-emerged,” he wrote, where “typical” means historical.

On the right, above, you can see one thing that hasn’t normalized: The reaction in individual stocks to results. “With the exception of last quarter, stocks reporting results this quarter have registered the largest post-earnings moves since the GFC,” Kostin went on, noting that “the median stock beating analyst Q3 EPS estimates outperformed the S&P 500 by 159bps on the day after reporting, provid[ing] a fertile environment for stock-picking and help[ing] sustain the backdrop of low stock correlations that has characterized most of the year.”

So, there you go: For the vast majority of investors, including a lot of “pros,” the above (the four charts and straightforward analysis) is all you really need to know about Q3 reporting season, which is now on the books with one notable exception still yet to report: Nvidia.