Given concerns in the market about tariffs and a possible economic slowdown or recession, have analysts lowered EPS estimates more than normal for S&P 500 companies for the second quarter?
The answer is yes. During the month of April, analysts lowered EPS estimates for the second quarter by a larger 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 2.4% (to $63.96 from $65.55) from March 31 to April 30.
In a typical quarter, analysts usually reduce earnings estimates during the first month of a quarter. During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during the first month of a quarter has been 1.8%. During the past ten years, (40 quarters), the average decline in the bottom-up EPS estimate during the first month of a quarter has been 1.6%. During the past fifteen years, (60 quarters), the average decline in the bottom-up EPS estimate during the first month of a quarter has also been 1.6%. During the past 20 years (80 quarters), the average decline in the bottom-up EPS estimate during the first month of a quarter has been 1.9%.
Thus, the decline in the bottom-up EPS estimate recorded during the first month of the second quarter was larger than the 5-year average, the 10-year average, the 15-year average, and the 20-year average.
At the sector level, nine of the eleven sectors witnessed a decrease in their bottom-up EPS estimate for Q2 2025 from March 31 to April 30, led by the Energy (-14.8%) sector. On the other hand, two sectors recorded an increase in their bottom-up EPS estimate for Q2 2025 during this period, led by the Utilities (+0.8%) sector.
Analysts have also continued to lower EPS estimates for CY 2025. From December 31 through April 30, the CY 2025 bottom-up EPS estimate declined by 3.1% (to $265.68 from $274.12).
Analysts also usually reduce earnings estimates for the year during the first four months of the year. During the past five years, the average decline in the bottom-up EPS estimate for the year during the first four months of the year has been 3.1%. During the past ten years, the average decline in the bottom-up EPS estimate for the year during the first four months of the year has been 2.3%. During the past fifteen years, the average decline in the bottom-up EPS estimate for the year during the first four months of the year has been 1.2%. During the past 20 years, the average decline in the bottom-up EPS estimate for the year during the first four months of the year has been 2.6%. During the past 25 years, the average decline in the bottom-up EPS estimate for the year during the first four months of the year has also been 2.6%.
Thus, the decline in the CY 2025 bottom-up EPS estimate recorded during the first four months of the year was equal to the 5-year average, but larger than the 10-year average, the 15-year average, the 20-year average, and the 25-year average.
At the sector level, nine sectors witnessed a decrease in their bottom-up EPS estimate for CY 2025 from December 31 to April 30, led by the Energy (-14.9%) and Materials (11.9%) sectors. On the other hand, two sectors recorded an increase in their bottom-up EPS estimate for CY 2025 during this period, led by the Communication Services (+1.4%) sector.
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