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Senior Earnings Analyst
John’s weekly research report, Earnings Insight provides analysis and commentary on trends in corporate earnings data for the S&P 500, including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.

For the fourth quarter of 2016, 77 companies in the S&P 500 have issued negative EPS guidance, which is below the number for Q3 2016 (82) and below the five-year average (83). If 77 is the final number for the quarter, it will tie with Q3 2015 for the third lowest number of S&P 500 companies issuing negative EPS guidance for a quarter over the past five years (Q1'12- Q4'16).

On the other hand, 34 companies in the S&P 500 have issued positive EPS guidance for the fourth quarter, which is slightly below the number for Q3 2016 (36), but above the five-year average (29). If 34 is the final number for the quarter, it will mark a tie with Q2 2016 and Q3 2015 for the fourth highest number of S&P 500 companies issuing positive EPS guidance for a quarter over the past five years (Q1'12-Q4'16).

At the sector level, the Information Technology (32), Consumer Discretionary (21), and Health Care (20) sectors have the highest number of companies issuing EPS guidance for the fourth quarter. This is not surprising, as these three sectors have historically had the highest number of companies providing quarterly EPS guidance on average. What is surprising is the unusually low number of companies issuing negative EPS guidance and the unusually high number of companies issuing positive EPS guidance in the Information Technology sector.

The number of companies issuing negative EPS guidance in the Information Technology sector is 15, which is below the number for Q3 2016 (20) and below the five-year average (21) for the sector. If the final number of companies issuing negative EPS guidance in the Information Technology sector is 15, it will mark the lowest number for this sector since Q3 2010 (11). The current record low (since Q2 2006) is 10, which occurred in Q2 2009 and Q3 2009.

In addition to the Information Technology sector, the Consumer Discretionary sector has also seen an unusually low number of companies issuing negative EPS guidance for the fourth quarter. The number of companies issuing negative EPS guidance in this sector is also 15, which is below the number for Q3 2016 (17) and below the five-year average (18) for the sector. If the final number of companies issuing negative EPS guidance in the Consumer Discretionary sector is 15, it will mark a tie with Q4 2014 for the lowest number for this sector since Q3 2012 (14).

The number of companies issuing positive EPS guidance in the Information Technology sector is 17, which is above the number for Q3 2016 (15) and well above the five-year average (9) for the sector. If the final number of companies issuing positive EPS guidance in the Information Technology sector is 17, it will mark the highest number for this sector since Q1 2011 (18). The current record high (since Q2 2006) is 24, which occurred in Q3 2010.

Record Number of Companies in the Industrials Sector Issuing Negative EPS Guidance

On the other hand, the Industrials sector has recorded a record-high number of companies issuing negative EPS guidance for the fourth quarter. The number of companies issuing negative EPS guidance in this sector is 13, which is above the number for Q3 2016 (12) and above the five-year average (9) for the sector. If the final number of companies issuing negative EPS guidance in the Industrials sector is 13, it will mark the highest number for this sector since FactSet began tracking guidance data in Q2 2006. The current record high (since Q2 2006) is 12, which occurred in Q3 2016, Q1 2016, and Q1 2014.

In addition to the Industrials sector, the Health Care sector has also seen an unusually high number of companies issuing negative EPS guidance for the fourth quarter. The number of companies issuing negative EPS guidance in this sector is 17, which is above the number for Q3 2016 (13) and above the five-year average (12) for the sector. If the final number of companies issuing negative EPS guidance in the Health Care sector is 17, it will mark the second-highest number for this sector since FactSet began tracking the data in Q2 2006. The current record high (since Q2 2006) is 18, which occurred in Q1 2016.

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