The talking heads are all aflutter about the “return of revenues”. This earnings season has been far better than expected (as we expected). With about half of the S&P 500 reporting we are seeing a remarkable 78% of companies beat bottom-line estimates while 72% also beat top-line estimates. This is a substantial improvement over the last quarter when less than 55% of companies beat top-line estimates. The good folks over at Bespoke Investments put things into perspective for us:

“In the last three earnings seasons, all we heard about was that bottom line numbers were coming in strong, but top line numbers remained weak. This earnings season, however, the top line numbers have been very strong as well. Below we highlight the percentage of stocks that beat revenue estimates on a quarterly basis going back to 1998. As shown, the revenue “beat” rate is currently at 72% this quarter. This is the highest level seen since the fourth quarter of 2004.”

Don’t get too excited just yet though. On a year over year basis (with very easy comps) the revenue growth leaves much to be desired. Revenues are growing just 3% ex-financials. Not exactly a barn burner in top-line growth. And this is in comparison to the very weak Q4 2008 when the economy was nearly lifeless. To make matters worse, the majority of the revenue growth is from overseas as opposed to the U.S….So, is this a recovery in revenues? it’s a start, but nothing worth getting too worked up over.