Featured Image

Analysts Cut S&P 500 EPS Estimates for Q3 Within Average Ranges

Earnings

By John Butters  |  October 4, 2019

During the third quarter, analysts lowered earnings estimates for companies in the S&P 500 for the quarter. The Q3 bottom-up EPS estimate (which is an aggregation of the median EPS estimates for the third quarter of all the companies in the index) dropped by 3.6% (to $41.35 from $42.90) during this period. How significant is a 3.6% decline in the bottom-up EPS estimate during a quarter? How does this decrease compare to recent quarters?

During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 3.3%. During the past 10 years (40 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 3.1%. During the past fifteen years (60 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 4.3%. Thus, the decline in the bottom-up EPS estimate recorded during the third quarter was larger than the five-year average and the 10-year average, but smaller than the 15-year average.

S&P 500 Change in Bottom-Up EPS During Quarter

At the sector level, all 11 sectors recorded a decline in their bottom-up EPS estimate during the quarter, led by the Energy (-17.5%) and Materials (-12.4%) sectors. Overall, seven sectors recorded a larger decrease in their bottom-up EPS estimate relative to their five-year average, eight sectors recorded a larger decrease in their bottom-up EPS estimate relative to their 10-year average, and five sectors recorded a larger decrease in their bottom-up EPS estimate relative to their 15-year average.

As the bottom-up EPS estimate for the index declined during the quarter, the value of the S&P 500 increased during this same period. From June 30 through September 30, the value of the index increased by 1.2% (to 2976.74 from 2941.76). The third quarter marked the 15th time in the past 20 quarters in which the bottom-up EPS decreased while the value of the index both increased during a quarter.

Change in Q319 EPS vs. Change in Price

 

Download the latest Earnings Insight

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