When 85% Beat Earnings, "Beating" Loses Its Edge

S&P 500 companies now beat earnings forecasts 85% of the time, up from roughly 50% decades ago. The cause: companies and analysts play a coordinated game. Management sets conservative guidance; analysts shade their estimates even lower. Result: beating consensus is statistically normal, not exceptional. For investors, this matters. Trades triggered by earnings beats carry weak predictive power when most outcomes are baked in.