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The most dreaded earnings season in years is finally underway in earnest, and based on early returns it's looking like the doomsayers will once again end up disappointed.

Despite sales stalled by weakness in Europe and Japan, IBM and Intel (NASDAQ:INTC) both exceeded the consensus earnings estimate. Each report had some warts, causing both stocks to pull back a bit so that IBM is now up just 10% and Intel 15% this year. But neither company backed off an annual forecast promising solid earnings growth.

Meanwhile, Abbott Labs (NYSE:ABT) boosted annual guidance. Big banks have also bested earnings estimates and showcased accelerating revenue growth.

Recent commentary has harped on the modest year-over-year earnings increase forecast for the S&P 500, without noting that global economic growth peaked in the first quarter of 2011 before succumbing to disaster in Japan, the European mess, and rising commodity prices.

Given the challenges of the past year, modest earnings growth is a win, and one that will look even better once most big companies exceed the artfully lowered expectations. Annual comparisons will get significantly easier in the quarters ahead, even as companies continue to take advantage of the significantly lower interest rates.

But let's proceed from generalities to specifics. Perhaps the best report of the season to date was filed last night by United Rentals (NYSE:URI), a leading renter of heavy equipment. All URI did was beat the consensus sales forecast by 8%, and put up earnings of 36 cents a share, six times what analysts had called for.

Rental revenue jumped 20% year-over-year during what the company described as the best first quarter in its history. United Rentals will spend nearly $1 billion on new machinery this year, because of the strong and rising demand it's seeing.

The company relies heavily on the nonresidential construction spending in the US, which has been less depressed than the housing market, but was still smaller last year than five years earlier.

Lately, United Rentals has seen a pickup in demand from the energy sector, manufacturers looking to expand US production, and quickly proliferating data centers, executives indicated on today's conference call. High-profile commercial redevelopment projects such as the Freedom Towers rising on the World Trade Center site in lower Manhattan represent another opportunity.

And while URI is investing heavily in new equipment, it's also accelerating the schedule of costs savings from its impending acquisition of its top competitor. And it's hardly the only publicly listed industry leader to cement its market power by taking advantage of today's low borrowing costs. The benefits of this merger will continue to accrue long after the low rates that made it possible have gone away.

The stock has been one of the strongest midcaps this year before breaking down badly last week in the aftermath of disappointing US job growth. But it's wiped away those losses with a 10% surge to a new all-time high today; shares are up 53% year-to-date and 17% since I last wrote about the company.

The United Rentals result is more germane to investors' working theory about the sources of future upside than the numbers from Intel and IBM, because the company is focused on the US and specifically on the long-suffering construction market.

But aggregate earnings numbers are stacking up just fine, an there's little evidence that the uptrend is at an end. Ask the traders who've sold short a third of United Rentals' public float how their bearish assumptions are working out.

Disclosure: None

Source: Earnings Are Better Than They Look