Highest Number of S&P 500 Companies Issuing Negative EPS Guidance Since Q4 2019

As of today, 95 S&P 500 companies have issued EPS guidance for the first quarter. This number is slightly below the five-year average and 10-year average of 99. Of these 95 companies, 66 have issued negative EPS guidance and 29 have issued positive EPS guidance. The number of companies issuing negative EPS guidance is above the five-year average of 59, but equal to the 10-year average of 66. The number of companies issuing positive EPS guidance is below the five-year average of 40 and below the 10-year average of 33.

Number of Companies Issuing Negative Guidance Increases for a Third Consecutive Quarter

However, the first quarter has seen the highest number of S&P 500 companies issuing negative EPS guidance for a quarter since Q4 2019 (73), and the lowest number of S&P 500 companies issuing positive EPS guidance for a quarter since Q2 2020 (25). In addition, the first quarter marks the third consecutive quarter in which the number of S&P 500 companies issuing negative EPS guidance has increased, and the third consecutive quarter in which the number of S&P 500 companies issuing positive EPS guidance has decreased.

Sector-Level Trends

At the sector level, the Industrials (+6) and Information Technology (+5) sectors have seen the largest increases in the number of S&P 500 companies issuing negative EPS guidance for Q1 2022 compared to their five-year averages. It is interesting to note that these two sectors also had the highest number of companies cite “supply chain” on earnings calls for Q4.

Given the recent rise in oil prices and interest rates, one might expect to see more companies in the Energy and Financials sectors issuing positive EPS guidance for the first quarter. However, these two sectors historically have seen few (if any) companies provide quarterly EPS guidance.

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

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