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S&P 500 Profit Growth Estimates Balloon to 39% — But the Market Is Paying for Cash Flow, Not Beats

Aggregate second-quarter profit estimates have been marked up more than 10 points this month, even as Aon, CaixaBank and Lennox show how little credit a revenue miss earns right now.

July 29, 2026 Earnings

The aggregate is ballooning

Estimates for annual aggregate S&P 500 profit growth through the second quarter now stand at a whopping 39%, more than 10 points higher than at the start of this month, according to LSEG data. That upward revision is the single most important number of the day, because it means the earnings cycle is not what is troubling equities — a point sharpened by the chart of the day showing US household sentiment remaining relatively subdued despite surging corporate profit growth and AI ebullience. The disconnect between corporate and consumer conditions is the theme running through the individual reports.

Industrials are converting orders into backlog

Johnson Controls delivered the standout on forward visibility: Q3 sales up 9% (10% organic), GAAP EPS of $1.23 and adjusted EPS of $1.42, orders up 27% organically, and a $21.0 billion backlog up 32% organically — enough to raise FY26 guidance. The contrast with Lennox is instructive. Lennox beat by $0.11 with revenue up 3% to $1.5 billion and GAAP operating income up 2% to $355 million, but revenue fell short and diluted EPS was flat at $7.72 while it updated full-year guidance to $23.00-$24.00. Vulcan leaned on commercial discipline and cost control in aggregates to reaffirm its full-year outlook, and Penske grew units delivered 5% to over 125,000 with revenue up 6% to $8.5 billion and EPS of $3.96. The pattern: order books and pricing discipline are holding; volume-driven top-line growth is not.

The war is showing up in the P&L

Bunge is the clearest case of conflict flowing straight into margins. Soybean processing and refining net sales hit $12.07 billion against $7.75 billion a year ago, and softseed processing and refining reached $4.09 billion versus $1.53 billion, letting the company raise 2026 adjusted EPS guidance to $9.25-$9.75 from $9.00-$9.50. The mechanism is explicit: corn and soybean prices have climbed sharply since the start of the Iran war, prompting farmers to release grain held back from last year's weak-priced harvest, while biofuel crops got an additional lift from the crude spike. That makes Bunge's guidance raise a leveraged bet on the conflict persisting — the same exposure, inverted, that the Fed is worried about.

Financials: strong quarters, indifferent tape

UBS posted $2.8 billion of net profit attributable to shareholders, in line with the LSEG consensus, with pre-tax profit up 64% to $3.6 billion and a new $3 billion buyback starting with $1 billion over three months; shares rose 2.5%. Sergio Ermotti flagged a "very good" pipeline in investment banking, M&A and capital markets and a "vibrant" IPO market including SpaceX's debut, called the AI correction "only healthy" given the pace of market-cap concentration over the last three-to-four months, and warned geopolitical volatility could create temporary headwinds. Underneath, US regional banking looks solid — Prosperity Bancshares' net interest margin rose 29 basis points to 3.47% with net income of $168.6 million after completing the Stellar Bancorp merger on 1 July, and OneMain reported diluted EPS of $1.32 on $26.9 billion of managed receivables. But CaixaBank's shares fell 6.3% despite a strong Q2 profit, a reminder that in this tape a good print is not a catalyst.

Consumer and services: execution beats scale

Greggs is the most instructive consumer read of the day. First-half sales topped £1.1 billion, up 7.2%, with pre-tax profit up nearly 20% to £76.0m from £63.5m, driven by cost control, the "bake at home" range in Tesco and Iceland, and a menu pivot — iced matcha lattes, a relaunched higher-protein salad range, and an April chicken roll the company called a "standout success." Like-for-like sales rose only 2.1%, so most of the growth came from 34 net new stores taking the estate to 2,773, over half of them in areas with no Greggs within a mile and a similar share off the High Street. Two cautions: CEO Roisin Currie says no further price rises are planned after May's increases, and the company warns supply chain investment will weigh on profits for the rest of 2026 unless customer confidence improves. Elsewhere, revenue was the binding constraint: Aon slipped 2% on a revenue miss despite 5% organic growth and margin expansion, Parsons missed by $0.11 on both lines, and Cognizant's 4.5% growth and 15.9% operating margin came with $1.1 billion of buybacks doing work.

Sources

Not investment advice.