Given concerns in the market about higher oil and gas prices, have analysts lowered EPS estimates more than normal for S&P 500 companies for the third quarter?
The answer is no. During the months of July and August, analysts increased EPS estimates in aggregate for the third quarter. The Q3 bottom-up EPS estimate (which is an aggregation of the median EPS estimates for Q3 for all the companies in the index) increased by 1.2% (to $89.69 from $88.64) from June 30 to August 31.
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 1.7%. 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 2.1%. 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 2.6%. 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 3.1%.
The third quarter marks the second-straight quarter that the bottom-up EPS estimate has increased during the first two months of a quarter.
At the sector level, four of the eleven sectors witnessed an increase in their bottom-up EPS estimate for Q3 2026 from June 30 to August 31, led by the Energy (+11.8%) sector. On the other hand, seven sectors recorded a decrease in their bottom-up EPS estimate for Q3 2026 during this period, led by the Materials (-9.1%) sector.
Analysts also increased earnings estimates for 2026 during the past two months. From June 30 through August 31, the CY 2026 bottom-up EPS estimate increased by 6.1% (to $361.38 from $340.49). Seven of eleven sectors recorded an increase in their bottom-up EPS estimate for CY 2026 during this period.
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