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Have More S&P 500 Companies than Normal Issued Negative Guidance for Q4?

Earnings

By John Butters  |  January 11, 2019

“Today we are revising our guidance for Apple’s fiscal 2019 first quarter, which ended on December 29. We now expect the following: Revenue of approximately $84 billion.” -Apple (Jan. 2)

On January 2, Apple issued revenue guidance for the fourth quarter of $84 billion, which was below the mean revenue estimate of $91.3 billion. Given that Apple cited weakness in China as a primary cause of the lower revenues, there were some concerns in the market that other companies might also issue EPS or revenue guidance below the expectations of analysts. Have more S&P 500 companies than normal issued negative EPS or negative revenue guidance for the fourth quarter to date?

On the earnings side overall, 106 S&P 500 companies have issued EPS guidance for the fourth quarter. Of these 106 companies, 72 have issued negative EPS guidance and 34 have issued positive EPS guidance. The number of companies issuing negative EPS guidance for Q4 is below the five-year average of 76, while the number of companies issuing positive EPS guidance for Q4 is above the five-year average of 32.

On the revenue side overall, 77 S&P 500 companies have issued guidance for the fourth quarter. Of these 77 companies, 46 have issued negative revenue guidance and 31 have issued positive revenue guidance. The number of companies issuing negative revenue guidance for Q4 is above the five-year average of 42, while the number of companies issuing positive revenue guidance for Q4 is slightly below the five-year average of 33. Thus, the earnings guidance issued by S&P 500 companies for Q4 has been slightly more positive than average, while revenue guidance issued by S&P 500 companies for Q4 has been slightly more negative than average.

The term “guidance” (or “preannouncement”) is defined as a projection or estimate for EPS provided by a company in advance of the company reporting actual results. Guidance is classified as negative if the estimate (or mid-point of a range estimates) provided by a company is lower than the mean EPS estimate the day before the guidance was issued. Guidance is classified as positive if the estimate (or mid-point of a range of estimates) provided by the company is higher than the mean EPS estimate the day before the guidance was issued.

number of S&P 500 companies with Q4 positive and negative eps guidance

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John Butters

Senior Earnings Analyst

John’s weekly research report, Earnings Insight provides analysis and commentary on trends in corporate earnings data for the S&P 500, including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.

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