NEW YORK (TheStreet) -- Fund managers characterize third-quarter earnings as solid but uninspiring, with stark divergence on the outlook for different sectors. Others say results season has shown the economic recovery is well in train - though strong revenue growth remains elusive.

Average earnings growth of around 5.7% this earnings season beat expectations for 2.9% but remains well below the long-term average of 8% according to Standard & Poor's. The energy sector was the only one to suffer a contraction in earnings, while technology surprised on the upside. Media, consumer discretionary, and home building posted solid results while healthcare is dogged by uncertainty around new legislation. Overall, analysts expect earnings growth for calendar year 2013 to contract by 4.16%.

Critically, cost-cutting continues to drive earnings, with companies hesitant to invest in hiring or new infrastructure. Still, some fund managers say this earnings season has been pivotal in showing margin and earnings improvement of the past few years is sustainable.

Eric Marshall of Hodges Capital Management says many investors had mistakenly thought earnings growth was due to temporary cost cutting, with a likely lift in expenses as the recovery continued. "But because the recession lasted so long it caused companies to make permanent structural changes and become more profitable," the Dallas-based fund manager said in a phone interview. "Even though revenue growth is not as dynamic as it should be, structural change means profit margins are growing." Marshall helps oversee $1.3 billion.

Others are more circumspect. Hennessy Funds' analyst Brian Peery says there is scant room for more cost-cutting, with few companies likely to generate double-digit earnings growth in coming years. But while companies may be hesitant to invest for growth, there is another option.

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