Analysts Making Larger Cuts Than Average to EPS Estimates for S&P 500 Companies for Q2

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

The answer is yes. During the months of April and May, analysts lowered EPS estimates 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 4.0% (to $62.91 from $65.55) from March 31 to May 29.

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 2.6%. 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 2.5%. 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 also been 2.5%. 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%.

Thus, the decline in the bottom-up EPS estimate recorded during the first two months 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, all eleven sectors have witnessed a decrease in their bottom-up EPS estimate for Q2 2025 from March 31 to May 29, led by the Energy (-18.9%) sector.

Analysts have also continued to lower EPS estimates for CY 2025. From December 31 through May 29, the CY 2025 bottom-up EPS estimate declined by 3.5% (to $264.49 from $274.12).

Analysts also usually reduce earnings estimates for the year during the first five months of the year. During the past five years, the average decline in the annual bottom-up EPS estimate during the first five months of the year has been 3.2%. During the past ten years, the average decline in the annual bottom-up EPS estimate during the first five months of the year has been 2.3%. During the past fifteen years, the average decline in the annual bottom-up EPS estimate during the first five 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 five months of the year has been 2.6%. During the past 25 years, the average decline in the annual bottom-up EPS estimate during the first five months of the year has also been 2.6%.

Thus, the decline in the CY 2025 bottom-up EPS estimate recorded during the first five months of 2025 was larger than the 5-year average, the 10-year average, the 15-year average, the 20-year average, and the 25-year average for the first five 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 May 29, led by the Energy (-17.6%) and Materials (-11.8%) sectors. On the other hand, the Communication Services (+2.3%) 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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