Overall, 110 S&P 500 companies have issued quarterly EPS guidance for the third quarter. Of these companies, 60 have issued negative EPS guidance, and 50 have issued positive EPS guidance.
The number of companies issuing negative EPS guidance is above the 5-year average of 57 but below the 10-year average of 62. Thus, the number for the third quarter is between the 5-year average and the 10-year average. However, this quarter also marks the lowest number of S&P 500 companies issuing negative EPS guidance for a quarter since Q4 2021 (53).
On the other hand, the number of companies issuing positive EPS guidance for the third quarter is well above the 5-year average of 41 and well above the 10-year average of 37. In fact, this is the highest number of S&P 500 companies issuing positive EPS guidance for a quarter since Q3 2021 (55).
As a result, the percentage of companies issuing negative EPS guidance is 55% (60 out of 110), which is below the 5-year average of 58% and below the 10-year average of 62%. This quarter also marks the lowest percentage of S&P 500 companies issuing negative EPS guidance since Q3 2021 (44%).
What is driving the higher number of S&P 500 companies issuing positive EPS guidance? At the sector level, the Information Technology sector has the highest number of companies issuing positive EPS guidance of all 11 sectors at 25. This number is above the 5-year average of 19.9 and above the 10-year average of 16.5 for the sector. In fact, this is the highest number of companies in the Information Technology sector issuing positive EPS guidance for a quarter since Q3 2021 (27).
At the industry level, the Software (8) and Semiconductors & Semiconductor Equipment (7) industries have the highest number of companies issuing positive EPS guidance within the Information Technology sector.
It is interesting to note that the Information Technology is also the only sector in the S&P 500 to record an increase in its bottom-up EPS estimate (+0.3%) during the third quarter. For more details, read our recent article: Did Analysts Cut EPS Estimates More Than Average for S&P 500 Companies for Q3?
Thus, both companies and analysts have been more optimistic in their earnings outlooks for this sector relative to the other ten sectors. The Information Technology sector also has the highest earnings growth rate of all ten sectors for Q3 2024 at 14.9%.
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.
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