Analysts Made Larger Cuts Than Average to EPS Estimates for S&P 500 Companies for Q1

Given concerns in the market about inflation and tariffs, did analysts lower EPS estimates more than normal for S&P 500 companies for the first quarter?

The answer is yes. During the first quarter, analysts lowered EPS estimates by a larger margin compared to the three most recent averages. The Q1 bottom-up EPS estimate (which is an aggregation of the median EPS estimates for Q1 for all the companies in the index) decreased by 4.2% (to $60.23 from $62.89) from December 31 to March 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 a quarter has been 3.3%. During the past ten years, (40 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 3.2%. During the past fifteen years, (60 quarters), the average decline in the bottom-up EPS estimate during a quarter has also been 3.2%. During the past 20 years (80 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 4.2%.

Thus, the decline in the Q1 bottom-up EPS estimate recorded during the first quarter was larger than the 5-year average, the 10-year average, and the 15-year average. However, it should be noted that it was equal to the 20-year average (-4.2%).

At the sector level, ten sectors witnessed a decrease in their bottom-up EPS estimate for Q1 2025 from December 31 to March 31, led by the Materials (-17.6%) and Consumer Discretionary (-10.4%) sectors. On the other hand, the Utilities (+0.1%) sector was the only sector that recorded an increase in its bottom-up EPS estimate for Q1 2025 during this period

Analysts also lowered EPS estimates for CY 2025 from December 31 to March 31, as the bottom-up EPS estimate for CY 2025 decreased by 1.6% (to $269.67 from $274.12) during this same period.

Analysts also usually reduce earnings estimates for the year during the first three months of the year. During the past five years, the average decrease in the annual bottom-up EPS estimate during the first three months of the year has been 1.5%. During the past ten years, the average decline in the annual bottom-up EPS estimate during the first three months of the year has been 1.4%. During the past fifteen years, the average decline in the annual bottom-up EPS estimate during the first three months of the year has been 1.1%. During the past 20 years, the average decline in the annual bottom-up EPS estimate during the first three months of the year has been 2.3%. During the past 25 years, the average decline in the annual bottom-up EPS estimate during the first three months of the year has also been 2.3%.

Thus, the decline in the CY 2025 bottom-up EPS estimate recorded during the first three months of 2025 was larger than the 5-year average, the 10-year average, and the 15-year average for the first three months of a year, but smaller than the 20-year average and the 25-year average for the first three months of a year.

At the sector level, ten sectors witnessed a decrease in their bottom-up EPS estimate for CY 2025 from December 31 to March 31, led by the Materials (-10.4%) and Energy (-5.5%) sectors. On the other hand, the Financials (+1.1%) sector is the only sector that recorded an increase in its bottom-up EPS estimate for CY 2025 during this period.

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