At this pace, earnings growth will top the first quarter's record 26% increase

  • Forty-eight companies have disclosed second quarter profit and revenue well above expectations.
  • The earnings beats have been particularly strong. Textron beat by 25 percent, WW Grainger by 17 percent and Morgan Stanley by 13 percent.
  • More importantly, guidance for future quarters is strong.
Michael Nagle | Bloomberg | Getty Images

So far, the second quarter has revealed American companies have not reached peak earnings yet.

With 10 percent of companies in the S&P 500 reporting as of Wednesday morning, it looks like another above-trend quarter. Forty-eight companies have disclosed second quarter profit and revenue well above expectations.

Q2 earnings: Another above-trend quarter

(48 companies reporting)

Earnings: up 25.3 percent

Revenue: up 10.1 percent

Source: Thomson Reuters

These compare to the estimate of 21.4 percent earnings growth for the S&P 500 as a whole, and are also well above the 8.2 percent revenue growth expected, according to Thomson Reuters.

The earnings beats have been particularly strong. Textron beat by 25 percent, WW Grainger by 17 percent and Morgan Stanley by 13 percent, according to Earnings Scout. So far, 87.5 percent of the companies reporting are beating expectations, way above the 64 percent that usually beat Wall Street's forecasts.

More importantly, guidance for future quarters is strong. Textron, CSX, United, and WW Grainger all guided higher (CSX on revenue) in the last 24 hours. As a result, earnings expectations for the third and fourth quarters are staying at the top end of their ranges. If this keeps up, we have a shot at passing the first quarter's record 26 percent earnings gain.

"These are very strong early results, and it's clear this is a lot more than just tax cuts," David Aurelio, who follows earnings for Thomson Reuters, told CNBC. "The fact that companies are beating expectations at such a high rate is a real positive, considering expectations were very high going into the quarter."

Aurelio said there is a good chance of beating the first quarter's record earnings growth, potentially surpassing it in the third quarter as well. He said he expects earnings to continue to grow into 2019, though without the benefit of the tax cuts they will not grow at the same pace as 2018.

"We may be approaching peak earnings growth sometime this year, but certainly not peak earnings," he said.