Every quarter, the same script plays out. S&P 500 companies report EPS above the consensus, sometimes by just a few cents, sometimes by more. The percentage is striking: often between 75% and 80%. FactSet has calculated an average beat rate of 78% over the past five years, and 76% over 10 years at the EPS level. The figure is slightly less impressive (but still high) for revenue: 70% over five years and 66% over 10 years.

That is a quantitative beat. Qualitatively, the gaps can also be meaningful. Over 10 years, an S&P 500 company beats market expectations by an average of 7% on EPS, but only 1.4% versus revenue projections.

An orienteering race

Taken at face value, this paints a picture of a system in which companies constantly surprise with operational excellence. Or of a world in which analysts and forecasters are particularly bad. In reality, this figure does not measure companies' raw performance, but rather the gap between reported results and previously calibrated expectations. And those expectations do not fall out of the sky.

In the United States, and increasingly in Europe, managing expectations is an art. Finance teams provide cautious guidance, stressing macroeconomic uncertainty, cost pressures and geopolitical risks. IR (investor relations) steadily frames expectations and tries to bring them down where it intended. Over the weeks, analysts gradually adjust their estimates, often downwards, especially as the release approaches. The consensus then becomes a reasonably attainable target. This mechanism, known as "underpromise, overdeliver", is not a conspiracy but rather a tacit balance: it is better to clear a lowered bar than to disappoint a market that is hypersensitive to negative surprises.

Does the packaging matter as long as the effect is there?

You also have to look beyond EPS alone. Beating EPS is easier than surprising on revenue or raising full-year outlooks. Profit can be influenced by share buybacks or by perfectly legal accounting adjustments that change EPS without radically altering the underlying financial momentum. The market, however, mainly focuses on the trajectory: margins, organic growth, cash flow and, above all, forecasts (guidance). A company can 'beat' expectations and still see its stock fall if the outlook disappoints.

The famous 80% therefore does not mean US companies are systematically better than expected; it means the system is structured to make a positive surprise more likely than the opposite. It is a cultural and financial mechanism, rooted in communication and the management of market risk. For investors, the key is not to count beats, but to analyze what is genuinely changing in the company's trajectory. To some extent, the real surprise is not the reported number, but rather the story it tells for the quarters ahead.