Earnings: What Have We Learned So Far?

Earnings season is underway with just under a quarter of S&P 500 companies reporting results so far.

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But this round of earnings is particularly important for investor confidence, as Wall Street looks for signs that the U.S. economic recovery hasn't stalled.

CNBC analyzed the latest Earnings Season Scorecard from Thomson Reuters to assess how this season is shaping up and to see if there are any patterns or trends developing.

At this point, roughly 67 percent of companies that have reported have beat expectations on profit, 20 percent fell below estimates and 13 percent have matched. Those statistics might make investors feel that the season is progressing nicely, but earnings alone may not tell the whole story.

Earnings are a measure of a company's profitability, but they can also reflect how companies manage their businesses. Variables come into play when calculating earnings, including raw material costs, cost of labor, as well as operating income and expenses.

But top line numbers — or a company's sales — can be equally important because they speak directly to how much of a firm's product is selling.

"Top line is even more important than the bottom line," said Jason Maynard a technology analyst at Wells Fargo. "Take Google [Thursday] night — their operating income was spot in line, but the below the line items were all positive contributors to EPS. When focusing on the quality, I always start with revenue. If you don't get the revenue right, you're not going to get other things right. "

So how does the top line trend look? Fifty-seven percent of reporting companies have come in with numbers below Wall Street expectations. Of those, certain sectors have more misses on a percentage basis than others: industrials, consumer discretionary (nonessential goods and services), health care and technology top the list.

These categories speak to the health of the broader economy.

Industrials typically outperform in a recovering economy while consumer discretionary stocks give us a sense of consumer confidence and whether people are out fueling the economy by spending. Health care is an industry that employs about 11.5 percent of the people in the U.S. and technology speaks to investment in future innovation.

"You have to care about all of these sectors because of their impact," Maynard said. "Take technology. The business for most tech companies worsened from the first quarter to the second, but we haven't fallen off a cliff yet. It's harder to do business now than last year, but it's not a disaster."

Maynard added one issue that's skewing this quarter's top line numbers.

"It's one of those periods where I wouldn't blame top line challenges only on economic woes," he said. "Forex (currency exchange) has had a significant impact. Year over year, most companies have had a negative impact from Forex. It got worse from the first quarter to the second, because the dollar is stronger."

While it's hard to call the revenue misses a trend just yet, they do suggest that the quality of this quarter's earnings might not stack up to past quarters. A look back shows that on average, 63 percent of firms in the past have outperformed 43 percent of the firms reporting revenue so far this quarter.

And these stats don't account for the number of companies who have lowered guidance, indicating that the second half of the year may not be robust.

Maynard says that most companies are trying to get on the right side of the guidance for the rest of 2012.

"Some of the companies were optimistic at the start of the year and have had to curtail expectations, but this isn't surprising given the state of the economy," Maynard explains.

Also Maynard argues that some of the stocks have rallied on mediocre results because in the near term we've exhausted some of the selling. It's expected that we'll see some come in light and guide a bit lower.

"The market and companies have now caught up with reality," Maynard contends.

-By CNBC's Jackie DeAngelis