Sales: 866.322.8738Support: 877.322.8738
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During the month of July, analysts lowered earnings estimates for companies in the S&P 500 for the third quarter. The Q3 bottom-up EPS estimate (which is an aggregation of the estimates for all the companies in the index) dropped by 1.5% (to $29.58 from $30.03) during the month. How significant is a 1.5% decline in the bottom-up EPS estimate during the first month of the quarter? How does this decrease compare to recent quarters?

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During the past year (four quarters), the average decline in the bottom-up EPS estimate during the first month of the quarter has been 3.2%. During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during the first month of the quarter has been 1.6%. During the past 10 years, (40 quarters), the average decline in the bottom-up EPS estimate during the first month of the quarter has been 2.0%. Thus, the decline in the bottom-up EPS estimate recorded during the course of the first month (July) of the third quarter was lower than the 1-year, 5-year, and 10-year averages.

In terms of price, the value of the S&P 500 has increased by 2.2% (to 2108.63 from 2063.11) during the month of July. Assuming the S&P 500 finishes the day with a value above 2063.11, this quarter will mark the tenth time in the past 16 quarters that the bottom-up EPS estimate decreased during the first month of the quarter while the price of the index increased during the first month of the quarter.

For these 10 quarters (including Q3 2015), the average decrease in the bottom-up EPS estimate during the first month of the quarter was 2.4%, while the average increase in price during the first month of the quarter was 4.1%.

Read more about earnings trends in this edition of FactSet Earnings Insight. Visit www.factset.com/earningsinsight to launch the latest report.

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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.

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