Stock Talk - When Good Isn't Good Enough: Stock Talk Update, June 13, 2026

Episode Date: June 12, 2026

Can strong earnings still disappoint investors? In this week’s Stock Talk, I explain why “good” results are not always good enough in today’s stock market.   Earnings season has been outstanding, with S&P 500 profit growth accelerating, margins remaining strong, and analysts raising expectations for the rest of 2026. But several high-quality companies still sold off after reporting strong results because stocks do not just react to earnings, they react to how those earnings compare to expectations already priced in.   In this episode, I break down why companies like Broadcom, CrowdStrike, NVIDIA, Ciena, Celestica, Deere, and others saw mixed or negative stock reactions despite solid earnings. I also discuss what FactSet’s latest earnings data says about S&P 500 earnings growth, profit margins, sector leadership, technology stocks, energy stocks, materials, health care weakness, and the outlook for the market through the rest of 2026.   The key takeaway: corporate fundamentals remain strong, but valuations and expectations are high. In this kind of market, companies need to beat expectations, raise guidance, and show continued acceleration.   About Chris Perras, CFA®, CLU®, ChFC®, Chief Investment Officer: As CIO, Chris is the lead investment strategist and director of research at Oak Harvest Financial Group. Chris develops the firm's core market outlook, putting his decades of experience and expertise to work for our clients. He hosts Oak Harvest's podcast, "Stock Talk," available on the website with new episodes each week. He completed his undergraduate studies at Georgia Tech, and went on to obtain an MBA from the Harvard Business School. Driven by a desire to maximize his knowledge and skill set, he acquired financial planning and investment management qualifications, becoming a Chartered Life Underwriter (CLU®), a Chartered Financial Consultant (ChFC®), and a Chartered Financial Analyst (CFA®).   Stock Talk is a weekly vlog/podcast dedicated to discussing the Oak Harvest Financial Group Investment Team's perspective on what's happening in the market. Hosted by Chief Investment Officer Chris Perras, each episode brings you our views on stocks, the market, and the economy with a little education thrown in for good measure. Listen each week and help stay connected to your money!   Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free visit: https://click2retire.com/lets-connect   Important disclosures: Content of Oak Harvest podcasts expresses the views of the speaker and is for informational purposes only. Oak Harvest believes that any data, articles, or information cited are reliable at the time of creation, but does not warrant any information contained herein to be correct, complete, accurate, or timely. References to third-party analysts should not be seen as an endorsement of their views or recommendations, and you should do your own research before investing. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast constitutes personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Any specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future results.

Everyone, welcome back to Stock Talk. This one's titled, When Good Isn't Good Enough. So for years, investors have been told that strong earnings are all that matters. This earning season reminds us that in the stock market, strong results alone aren't often enough. Stocks react not to earnings themselves, but to how those earnings compared to expectations already embedded in the stock market. There are four key takeaways this quarter. Earning season was outstanding, but several stocks fell. investors didn't reward good results. They were only rewarded with results that exceeded the very highest or those who jumped over a very low bar in low expectations. Second, profit margins remain near

record territory. Companies continue to demonstrate pricing power and operating leverage despite higher interest rates and ongoing economic uncertainty caused by the iron roar. Third, technology, energy, and materials are driving earnings growth. The healthcare sector remains the major laggard as earnings estimates continue moving lower in that group. Finally, overall, S&P 500 earnings outlooks is accelerating. It's not slowing. Facts that now expects more than 20% earnings growth in the S&P 500 in both the second and third quarters and then even in the fourth quarter of this year. So everyone, I'm glad you've joined us. This week, I want to discuss a lesson that every investor eventually learns. Sometimes good isn't always good enough. In fact, some of the

biggest stock declines this earnings season occurred in companies reporting results that most investors would consider excellent. Why? Because short-term stocks don't always move based on whether earnings are good or bad. Many times over shorter-term earnings period, stocks move based on whether earnings are better or worse than the marginal buyer or seller stock expectations. Right now, expectations especially for artificial intelligence, semiconductors, technology companies, that expectations bar has become extraordinarily high. The latest fact set earnings insight report from June 6 offers a useful, big-picture snapshot of the current earnings environment.

The outlook for the overall market in the S&P 500 earnings remains very strong over the next few quarters. Even so, several market favorites sold off after reporting first quarter of 2006 results. Today, let's look at what happened and what it might mean for investors going forward. So first point. S&P 500 earnings scorecard. Let's go ahead and look there. Fundamentals remain very, very strong.

Let's start with the good news. The overall earnings season remains exceptionally healthy. Facts that reports that most companies beat both earnings and revenue estimates in the first quarter, and analysts have actually raised earnings estimates throughout the quarter. This is very unusual overall. This almost never happened. Historically, Ennis reduced estimates by roughly 2% during. a quarter. So far, not this quarter, the second quarter bottoms up earnings estimates have

increased by 2.7% since the end of the first quarter, March 31st. That's a swing of nearly five percentage points relative to history. Even better, companies themselves are optimistic. Of the 108 companies issuing guidance for the second quarter, 61 issued positive guidance, 47 issued negative guidance. That means 56% of companies guided higher compared to an average of only 41%. So right now, FACSET projects second quarter earnings growth, 21.7%, third quarter earnings growth, 25.1% and fourth quarter, 22.6%. For the full year of 2006, that's earnings growth of 22.8%. If that's achieved, second quarter would mark a second consecutive quarter of above 20% earnings growth, seventh consecutive quarter above double digit earnings growth. Those are remarkably strong numbers.

that despite all the good news, investors still punish several companies. Why? Because expectations were even higher in many stocks. It already rallied 30 to 100% of the late March lows. Remember, the S&P 500 rallied over 20% in less than 45 trading days. That's a true V-bottom. It's also why we called this when good results weren't good enough. What are we talking about? Consider several recent examples.

Here's a quick table. Look at that list. You know most of the names. they all reported better than expected numbers for the most part, and most of the stocks actually declined. Most of these companies continue to benefit from strong underlying business trends, yet investors have become increasingly selective. After enormous stock gains over the past years, even strong earnings are being scrutinized for signs of slowing momentum. Lower future growth rates or any indication that expectations have gotten ahead of reality. This is the classic late-stage bull market behavior.

The lesson? over the short-term stocks often don't get rewarded for being great. They are rewarded for being greater than expected. Second point, profit margins remain very, very good, better than expected overall. That's the second takeaway from the earnings season. For years, investors have worried that inflation, higher wages, and higher interest rates would crush corporate profitability. That simply has not happened. Instead, many companies have adapted remarkably well.

profit margins remain near, historically, strong, and high levels. Many companies continue to use technology, automation, artificial intelligence, scale advantages to protect profitability. This is one reason earnings growth has been accelerating faster than many economists and strategists expected. The company does not need explosive revenue growth if they can improve efficiency and expand margins. And that's exactly what we're seeing across a large part of corporate America.

The margin story is one of the most underappreciated, bullish developments in the overall market. Point three, winners and losers by sector. Yep, a lot of times sector matters. The leadership sector remains very clear. Positive contributors, information technology, while the energy sector has grown the fastest by market cap, technology continues to dominate earnings growth. When the S&P 500 has 50% technology stocks at the top, it's hard not to look there. FACS set estimates that second quarter earnings growth for the sector at over 58%. Sugal stockwise, Nvidia, and Apple have been among the largest contributors to higher expectations in that group. In the energy sector, energy has experienced the largest upward revision.

Expected earnings estimates have increased nearly 50% since March. Chevron, Exxon, ConocoPhillips, and other producers have benefited from stronger commodity trends. Third group, materials. Materials rank third in upward revisions, chemical and industrial materials, companies have seen meaningful. Estimate increases as economic activity remains stronger than expected. On the negative side, you got to look at healthcare. Healthcare is the lone weak spot. Expected earnings have fallen sharply since March. Axet now projects earnings contraction for the sector, driven largely by estimate reductions at companies like Gilead Sciences. The contrast is striking.

Technology, energy, and materials are moving higher. Healthcare estimates moving lower. That divergence is helping explain much of the market's leadership we've witnessed the last year, and especially off the March Lopes. Fourth and final point, the outlook is getting better, not worse for the overall market. Perhaps that's the most important message in this entire report. Analysts are becoming more optimistic, not less. Here's a graphic for 2006 and 2007, S&P 500, bottoms up earnings estimates, $336 in earnings in 2006, and over $390 in 2007. Even facts sets quarterly bottom-up earnings forecast continue to move higher. Current expectations call for earnings growth in the second quarter, 21.7, third quarter, 25.1.

Fourth quarter, 22.6, full year, 22.8. Revenue growth also remains strong. Second quarter, 12% growth, third quarter, 10.7% growth, and fourth quarter, around 10.2%. Those aren't recession numbers. Those are expansion numbers. The challenge for investors seems to be we've run quite far and fast off the March lows and valuation. The S&P 5004P multiple now stands at 21.1 times earnings. That's above both the five year and 10 year average. That means that the market is already pricing in some good news. It's also why the gains year to date have been in entirely earnings growth while P multiple expansion is actually not expanded, it's contracted. And that's what we're saying. Some stocks decline after strong earnings report. Expectations have risen almost as fast as earnings. So everyone out there, what's the bottom line?

The latest facts that report P's a very encouraging picture for the overall stock market. Corporate earnings are growing and actually projected to accelerate for at least two more quarters. Profit margins remain strong. Guidance is improving. and analysts are raising estimates. And earnings growth is expected to remain above 20% for the rest of this year. That's the good news. The challenge is that many investors already know it. And in today's market, simply being good isn't good enough. Companies must exceed expectations. They must raise guidance. They need to demonstrate an acceleration in their business. When valuations are elevated and optimism is abundant, the market demands near perfection. That's why the theme of this earning season is

simply when good isn't good enough. I'm Chris Paris and thank you for watching and I'll see you again next week. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created but any cited data, indicators, statistics or other sources are not guaranteed. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast should be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment, and your investment results

may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss and past performance. is not indicative of future results.