Earnings season officially kicks off today with big banks reporting and analysts are expecting strong outperformance.

What's happening: In the second quarter there was an unusually high 12.5 percentage point improvement in earnings results from their original projections (to -31.6% from -44.1%) due to a record-high percentage of companies reporting positive EPS surprises (84%).

  • Investors are betting on a repeat, as Q3 earnings estimates have been consistently upgraded over the past few weeks, to -20.5% from -25.3% on June 30.

The state of play: Earnings per share estimates have seen the second-highest upward revision since the financial crisis, Savita Subramanian, head of U.S. equity at Bank of America Securities, says in a note to clients.

  • She's expecting even better results based on the economy's better-than-expected third quarter macroeconomic data and predicts earnings will be 5 percentage points better than even the improved expectations.
  • That's thanks to exceptionally strong manufacturing and non-manufacturing PMI reports, rising oil prices, strong consumption trends and a weakened dollar.

Where it stands: Of the 22 S&P 500 companies that already have reported earnings, 20 beat estimates, and they beat by a margin of 25%, according to Nick Raich, who tracks corporate earnings at Earnings Scout.

  •  “Analysts have not had the benefit of corporate guidance, and without that guidance, they assumed the worst, and the worst has not come,” Raich told CNBC.

By the numbers: Over the past five years on average, S&P 500 companies have exceeded estimated earnings by 5.6%, per FactSet, and 73% of S&P companies have reported actual EPS above the mean EPS estimate on average.

Yes, but: Even if earnings do beat by 5 percentage points from their improved level, the actual earnings decline for the quarter would be 17.6%, the second largest year-over-year decline by the index since Q2 2009 (-26.9%), trailing only the previous quarter's earnings (-31.6%), FactSet notes.

  • The S&P 500 is 20% higher than it was a year ago.

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