Given concerns in the market about inflation and tariffs, did analysts lower EPS estimates more than normal for S&P 500 companies for the fourth quarter? The answer is no. During the fourth quarter, analysts increased EPS estimates in aggregate for the quarter. The Q4 bottom-up EPS estimate (which is an aggregation of the median EPS estimates for Q4 for all the companies in the index) increased by 0.5% (to $70.50 from $70.16) from September 30 to December 31.
In a typical quarter, analysts usually reduce earnings estimates during the quarter. During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during the quarter has been 1.6%. During the past ten years, (40 quarters), the average decline in the bottom-up EPS estimate during quarter has been 3.1%. During the past fifteen years, (60 quarters), the average decline in the bottom-up EPS estimate during the quarter has been 3.3%. During the past 20 years (80 quarters), the average decline in the bottom-up EPS estimate during the quarter has been 4.3%.
This quarter marks the 2nd straight quarter in which analysts have increased EPS estimates in aggregate during the quarter.
At the sector level, only three of the eleven sectors witnessed an increase in their bottom-up EPS estimate for Q4 2025 from September 30 to December 31: Information Technology (+6.1%), Financials (+1.2%), and Energy (+0.3%). On the other hand, eight sectors recorded a decrease in their bottom-up EPS estimate for Q4 2025 during this period, led by the Utilities (-6.2%), Health Care (-4.0%), and Consumer Staples (-3.8%) sectors.
Analysts also increased earnings estimates for 2026 over the past three months. From September 30 through December 31, the CY 2026 bottom-up EPS estimate increased by 2.5% (to $311.30 from $303.79). At the sector level, five sectors witnessed an increase in their bottom-up EPS estimate for CY 2026 from September 30 to December 31, led by the Information Technology (+9.5%) sector. On the other hand, six sectors recorded a decrease in their bottom-up EPS estimate for CY 2026 during this period, led by the Energy (-5.9%) sector.
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