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).
This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.