Are More S&P 500 Companies Now Providing EPS Guidance for 2020?

During each corporate earnings season, it is not unusual for companies to provide guidance on expected earnings for future quarters or for the full year. However, a number of companies are having difficulty providing estimates for future earnings due to the uncertainty surrounding the negative impacts of COVID-19. During the Q1 earnings season, 185 S&P 500 companies withdrew or did not provide annual EPS guidance, while only 100 S&P 500 companies provided annual EPS guidance. Given the large number of companies that did not provide annual EPS guidance during the Q1 earnings season, how many S&P 500 companies are providing EPS guidance for 2020 or 2021 during the Q2 earnings season to date? How many S&P 500 companies have continued to not provide or have withdrawn EPS guidance for 2020 or 2021 during the Q2 earnings season to date?

To answer these questions, FactSet searched for comments on annual EPS guidance in the Q2 earnings releases, presentations, and conference call transcripts of the 128 S&P 500 companies that had reported actual results for the second quarter through July 24. Of these 128 companies, 60 (47%) commented on EPS guidance for the current year.

Of these 60 companies, 32 (53%) stated that they were not providing EPS guidance or confirmed a previous withdrawal of EPS guidance for either FY 2020 or FY 2021. Almost all of these companies cited the uncertainty of the future economic impacts of COVID-19 as the reason for not providing or withdrawing EPS guidance for the full year. At the sector level, the Industrials (10) and Consumer Staples (7) sectors had the highest number of companies withdrawing or not providing EPS guidance for the year.

On the other hand, 28 S&P 500 companies provided EPS guidance for FY 2020 or FY 2021. Of these 28 companies, 13 provided annual EPS guidance that was higher than the previous guidance issued by the company, six maintained previous (annual) EPS guidance, eight provided annual EPS guidance that was lower than the previous guidance issued by the company, and one initiated annual EPS guidance (no prior guidance issued). At the sector level, the Health Care (8) and Industrials (6) sectors had the highest number of companies issuing EPS guidance for the year.

Thus, slightly more S&P 500 companies are not providing annual EPS guidance (32) than providing annual EPS guidance (28) at this point in time in the Q2 earnings season.

However, it should be noted there has been a 40% increase in the number of S&P 500 companies providing annual EPS guidance during the Q2 earnings season to date (28) relative to the Q1 earnings season at the same point in time on April 24 (20). This increase can be attributed in part to an uptick in the number of companies reissuing annual EPS guidance during the Q2 earnings season after withdrawing or not providing annual EPS guidance during the Q1 earnings season. To date, 10 S&P 500 companies that withdrew or did not provide annual EPS guidance during the Q1 earnings season provided annual EPS guidance during the Q2 earnings season.

It should also be noted that there has been a substantial increase in the number S&P 500 companies issuing annual EPS guidance that is higher than the previous guidance issued by the company during the Q2 earnings season to date (13) relative to the Q1 earnings season at the same point in time on April 24 (4). 

Given the increase in the number of S&P 500 companies providing annual EPS guidance in Q2 after withdrawing annual EPS guidance in Q1 and the increase in the number of S&P 500 companies issuing annual EPS guidance above previous guidance, it does appear that some S&P 500 companies have better visibility on future earnings now relative to three months ago. The market will certainly continue to focus on any forward EPS guidance issued by S&P 500 companies for the remainder of the earnings season to gain as much clarity as possible on the future economic impacts of COVID-19. 

A list of the companies that withdrew and provided 2020 EPS guidance (and their comments) can be found in the full FactSet Earnings Insight report, which can be downloaded at the link below.