First Increase in EPS Estimates for S&P 500 Companies for Q2 2024 Since Q4 2021

Given concerns in the market about 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 no. During the month of April, analysts actually increased EPS estimates for the second quarter. The Q2 bottom-up EPS estimate (which is an aggregation of the median EPS estimates for Q2 for all the companies in the index) increased by 0.7% (to $59.64 from $59.23) 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 1.9%. 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 1.8%. During the past fifteen years, (60 quarters), the average decline in the bottom-up EPS estimate during the first month of a quarter has been 1.5%. 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 1.8%.

In fact, the second quarter marked the first time that the bottom-up EPS estimate increased during the first month of a quarter since Q4 2021 (+0.3%).

At the sector level, seven of the eleven sectors witnessed an increase in their bottom-up EPS estimate for Q2 2024 from March 31 to April 30, led by the Energy (+8.6%) sector. On the other hand, four sectors recorded a decrease in their bottom-up EPS estimate for Q2 2024 during this period, led by the Industrials (-2.6%) sector.

It is interesting to note that while analysts were increasing EPS estimates for Q2 for S&P 500 companies during the month of April, the value of the index declined during this period. From March 31 to April 30, the S&P 500 price decreased by 4.2% (to 5035.69 from 5254.35).

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