S&P 500 Tech Companies Most Positive for Q3

For the third quarter, 80 companies in the S&P 500 have issued negative EPS guidance and 34 companies have issued positive EPS guidance. The number of companies issuing negative EPS is slightly above the number for Q2 2016 (79), but below the five-year average (83). The number of companies issuing positive EPS guidance is equal to the number for Q2 2016 (34), but above the five-year average (29).

At the sector level, the Information Technology (35), Consumer Discretionary (23), and Health Care (20) sectors have the highest number of companies issuing EPS guidance for the third quarter. This is not surprising, as these three sectors have historically had the highest number of companies providing quarterly EPS guidance on average.

What is surprising, however, is the unusually high number of companies in the Information Technology sector issuing positive EPS guidance for Q3. The number of companies issuing positive EPS guidance in the Information Technology sector is 15, which is above the number for Q2 2016 (13) and above the five-year average (9) for the sector.

If the final number of companies issuing positive EPS guidance in the Information Technology sector is 15, it will mark the highest number for this sector since Q1 2012 (16). The current record high (since 2006) is 24, which occurred in Q3 2010.

At the industry level, eight of the 15 companies that have issued positive EPS guidance in this sector are in the Semiconductor & Semiconductor Equipment industry.

Highest Number of Technology Sector Companies Guiding Sales Above Estimates Since Q1 2011

Why are more companies in the Information Technology sector issuing positive EPS guidance for the third quarter? One reason is that an unusually high number of companies in this sector are also issuing positive sales guidance for Q3 2016. Of the 15 companies in this sector that issued EPS guidance above the expectations of analysts, 13 also guided sales above the expectations of analysts.  

For the third quarter overall, 28 companies in the Information Technology sector have issued positive sales guidance. This number is above the number for Q1 2016 (19) and double the five-year average (14).

If the final number of companies issuing positive sales guidance in the Information Technology sector is 28, it will mark the highest number for this sector since Q1 2011 (also 28). The current record high (since 2006) is 32, which occurred in Q2 2010.

At the industry level, 10 of the 28 companies that have issued positive sales guidance in this sector are in the Semiconductor & Semiconductor Equipment industry, while six of the 28 companies that have issued positive sales guidance in this sector are in the Software industry.