High Number of S&P 500 Tech Cos Issue Positive EPS Guidance for Q4 2019

Heading into the start of the Q4 2019 earnings season, 107 companies in the S&P 500 have issued EPS guidance for Q4 2019. Of these 107 companies, 73 have issued negative EPS guidance and 34 have issued positive EPS guidance. The number of companies that have issued negative EPS guidance is slightly below the five-year average (75), while the number of companies that have issued positive EPS guidance is slightly above the five-year average (32).

At the sector level, the Information Technology sector has the highest number of companies issuing EPS guidance for the quarter at 39. This is not unusual, as the Information Technology typically has the highest number of companies issuing EPS guidance each quarter. Of these 39 companies, 19 have issued negative EPS guidance and 20 have issued positive EPS guidance.

While the number of companies that have issued negative EPS guidance in this sector is nearly equal to the five-year average (20), the number of companies that have issued positive EPS guidance in this sector is well above the five-year average (14). If 20 is the final number for the quarter, it will mark the highest number of companies in the Information Technology sector issuing positive EPS guidance for a quarter since Q2 2018 (also 20). It will also mark a tie (with Q2 2018 and Q3 2010) for the second highest number in this sector since FactSet began tracking EPS guidance data in 2006, trailing only Q1 2018 (25). At the industry level, the Semiconductors & Semiconductor Equipment industry has the highest number of companies issuing positive EPS guidance in the sector at eight.

It is interesting to note that the Information Technology sector is the only sector in which analysts have not lowered earnings expectations (in aggregate) since the start of the quarter. The expected earnings decline for the Information Technology sector today (-1.8%) is equal to the expected earnings decline on September 30 (-1.8%).

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.