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69% Fewer S&P 500 Companies Issuing Negative EPS Guidance for Q3 Than Average

Earnings

By John Butters  |  September 25, 2020

For the second quarter, 53 S&P 500 companies issued quarterly EPS guidance, which was the lowest number of S&P 500 companies issuing EPS guidance for a quarter since FactSet began tracking this metric in 2006. Are fewer S&P 500 companies issuing EPS guidance for the third quarter as well?

The answer is yes. To date, 67 S&P 500 companies have issued EPS guidance for Q3 2020, which is 36% below the five-year average of 104. If 67 is the final number for the quarter, it will mark the second lowest number of S&P 500 companies issuing EPS guidance for a quarter over the past 10 years (Q4 2009), trailing only the record-low number of 53 in the previous quarter. However, it will mark a 26% increase over the previous quarter as well.

No. of S&P 500 Cos Issuing Quarterly EPS Guidance 5-year

The low number of S&P 500 companies issuing EPS guidance for the third quarter is due to a substantial decrease in the number of S&P 500 companies issuing negative EPS guidance for the quarter. Of the 67 companies that have issued EPS guidance for Q3 2020, only 22 have issued negative EPS guidance. This number is 69% below the five-year average of 70.5. In fact, if 22 is the final number for the quarter, it will mark the lowest number of S&P 500 companies issuing negative EPS guidance for a quarter since FactSet began tracking this metric in 2006. The current record is 28, which occurred in the previous quarter. At the sector level, eight of the 11 sectors have seen fewer companies issue negative EPS guidance for Q3 2020 relative to their five-year averages (rounded to the nearest whole number), led by the Consumer Discretionary (1.0 vs. 15.5) and Health Care (1.0 vs. 11.2) sectors.

No. of S&P 500 Cos Issuing EPS Guidance Q320 vs 5-yr average NEW

Over 100 S&P 500 companies have either withdrawn or not provided annual EPS guidance for CY 2020 or CY 2021 to date. Most of these companies cited uncertainty around the impact of COVID-19 as the reason for not providing annual EPS guidance. Thus, it appears this uncertainty is also causing many S&P 500 companies not to provide short-term EPS guidance as well as long-term EPS guidance at this point in time.

However, it is interesting to note that the total number of S&P 500 issuing EPS guidance for the third quarter would be even lower if not for the unusually high number of S&P 500 companies issuing positive EPS guidance for the quarter. Of the 67 companies that have issued EPS guidance for Q3 2020, 45 have issued positive EPS guidance. This number is 36% above the five-year average of 33.1. In fact, if 45 is the final number for the quarter, it will mark a tie with Q2 2010 and Q2 2018 for the second highest number of S&P 500 companies issuing positive EPS guidance for a quarter since FactSet began tracking this metric in 2006. The current record is 51, which occurred in Q1 2018. At the sector level, five of the 11 sectors have seen more companies issue positive EPS guidance for Q3 2020 relative to their five-year averages (rounded to the nearest whole number), led by the Information Technology (22.0 vs. 15.3) sector.

S&P 500 Sector Level Positive EPS Guidance Q320 vs 5-year avg

S&P 500 Sector Level Negative EPS Guidance Q320 vs 5-year avg

The term “guidance” (or “preannouncement”) is defined as a projection or estimate for EPS provided by a company in advance of the company reporting actual results. Guidance is classified as negative if the estimate (or mid-point of a range estimates) provided by a company is lower than the mean EPS estimate the day before the guidance was issued. Guidance is classified as positive if the estimate (or mid-point of a range of estimates) provided by the company is higher than the mean EPS estimate the day before the guidance was issued.

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John Butters

Vice President, Senior Earnings Analyst, Investor Relations

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His 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, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).

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