Analysts Have Increased EPS Estimates for S&P 500 Companies for Q2 2024 Since March 31

Given concerns in the market about a possible economic slowdown, have analysts lowered EPS estimates more than normal for S&P 500 companies for the second quarter?

The answer is no. During the months of April and May, analysts actually increased EPS estimates in aggregate for the second quarter. The Q2 bottom-up EPS estimate (which is an aggregation of the median EPS estimates for Q2 for all the companies in the index) increased by 0.3% (to $59.43 from $59.22) from March 31 to May 30.

In a typical quarter, analysts usually reduce earnings estimates during the first two months of a quarter. During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during the first two months of a quarter has been 2.8%. During the past ten years, (40 quarters), the average decline in the bottom-up EPS estimate during the first two months of a quarter has been 2.7%. During the past fifteen years, (60 quarters), the average decline in the bottom-up EPS estimate during the first two months of a quarter has been 2.4%. During the past 20 years (80 quarters), the average decline in the bottom-up EPS estimate during the first two months of a quarter has been 3.0%.

In fact, the second quarter marked just the second time that the bottom-up EPS estimate increased during the first two months of a quarter since Q3 2021.

At the sector level, five of the eleven sectors witnessed an increase in their bottom-up EPS estimate for Q2 2024 from March 31 to May 30, led by the Energy (+6.2%) sector. On the other hand, six sectors recorded a decrease in their bottom-up EPS estimate for Q2 2024 during this period, led by the Industrials (-4.3%) sector.

However, it is important to note that while analysts increased EPS estimates in aggregate for Q2 2024 during the month of April (to $59.63 from $59.22), they lowered EPS estimates for Q2 2024 in aggregate during the month of May (to $59.43 from $59.63). Will analysts continue revising Q2 EPS estimates lower during the month of June?

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