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

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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