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Analysts Made Smaller Cuts Than Average to EPS Estimates for S&P 500 Companies for Q2

Earnings

By John Butters  |  July 3, 2024

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

The answer is no. During the second quarter, analysts lowered EPS estimates for the quarter by a smaller margin than average. The Q2 bottom-up EPS estimate (which is an aggregation of the median EPS estimates for Q2 for all the companies in the index) decreased by 0.5% (to $58.94 from $59.22) from March 31 to June 30.

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 3.4%. During the past ten years, (40 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 3.3%. During the past fifteen years, (60 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 3.2%. During the past 20 years (80 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 4.0%.

Thus, the decline in the bottom-up EPS estimate recorded during the second quarter was smaller than the 5-year average, the 10-year average, the 15-year average, and the 20-year average.

At the sector level, seven sectors recorded a decrease in their bottom-up EPS estimate for Q2 2024 from March 31 to June 30, led by the Industrials (-4.7%) sector. On the other hand, four sectors witnessed an increase in their bottom-up EPS estimate for Q2 2024 during this period, led by the Consumer Discretionary (+2.9%) sector.

However, it is important to note that while analysts decreased EPS estimates in aggregate for Q2 2024 during the quarter, they increased EPS estimates for CY 2025 by 1.0% (to $278.80 from $276.14) over this period. At the sector level, seven of the eleven sectors witnessed an increase in their bottom-up EPS estimate for CY 2025 from March 31 to June 30, led by the Communication Services (+3.2%), Information Technology (+2.6%), and Consumer Discretionary (+2.5%) sectors.

The FactSet Earnings Insight report was published two days early on July 3 due to the July 4 holiday. The next edition of the report will be published on Friday, July 12.

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This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.

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John Butters

Vice President, Senior Earnings Analyst

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His 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, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).

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The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.