Featured Image

Q2 S&P 500 EPS Estimate Dips Slightly

Earnings

By John Butters  |  April 29, 2016

During the month of April, analysts lowered earnings estimates for companies in the S&P 500 for the quarter. The Q2 bottom-up EPS estimate (which is an aggregation of the EPS estimates for all the companies in the index) dropped by 1.8% (to $28.90 from $29.43) during this period. How significant is a 1.8% decline in the bottom-up EPS estimate during the first month of a quarter? How does this decrease compare to recent quarters?

Related: Will S&P 500 Report Earnings Decline for Q1?

During the past year (four quarters), the average decline in the bottom-up EPS estimate during the first month of a quarter has been 2.8%. During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during the first month of a quarter has been 2.2%. During the past 10 years, (40 quarters), the average decline in the bottom-up EPS estimate during the first month of a quarter has been 2.3%. Thus, the decline in the bottom-up EPS estimate recorded during the first month of the second quarter was smaller than the 1-year, 5-year, and 10-year averages.

1.png

S&P 500 Value Increases as EPS Estimates Decline

As the bottom-up EPS estimate declined during the first month of the quarter, the value of the S&P 500 increased during this same time frame. From March 31 through April 27, the value of the index has increased by 0.8% (to 2075.81 from 2059.74). Assuming the market does not close at or below 2059.74 today, this month will mark the 10th time in the past 16 quarters in which the bottom-up EPS estimate decreased during the first month of a quarter while the value of the index increased during the first month of the quarter.

2.png

At the sector level, the Information Technology has recorded the largest percentage decline in the bottom-up EPS estimate for Q2 during the first month of the quarter at -9.4% (to $9.06 from $10.01). This sector has also recorded the largest decline in value of all 10 sectors over this time frame at -4.6% (to 703.04 from 737.12).

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

John Butters

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.

Comments