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More S&P 500 Companies Issuing Negative EPS Guidance for First Time Since Q2 2020

Earnings

By John Butters  |  January 7, 2022

As of today, 93 S&P 500 companies have issued EPS guidance for the fourth quarter. This number is slightly below the five-year average of 100. Of these 93 companies, 56 have issued negative EPS guidance and 37 have issued positive EPS guidance. The number of companies issuing negative EPS guidance is below the five-year average of 60, while the number of companies issuing positive EPS guidance is below the five-year average of 40.

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However, more S&P 500 companies are issuing negative EPS guidance than positive EPS guidance for a quarter for the first time since Q2 2020. The number of S&P 500 companies issuing negative EPS guidance for Q4 2021 is the highest number since Q1 2020 (61). On the other hand, the number of S&P 500 companies issuing positive EPS guidance is the lowest number since Q2 2020 (25).

What is Driving the Negative Shift in EPS Guidance Issued by S&P 500 Companies?

At the sector level, the Information Technology (+6) and Industrials (+6) sectors have seen the largest increases in the number of S&P 500 companies issuing negative EPS guidance for Q4 2021 compared to Q3 2021. Conversely, the Information Technology (-8) and Consumer Discretionary (-5) sectors have seen the largest decreases in the number of S&P 500 companies issuing positive EPS guidance for Q4 2021 compared to Q3 2021.

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However, it should be noted that over longer periods in time, more S&P 500 companies typically issue negative EPS guidance than positive EPS guidance. For Q4 2021, 60% of S&P 500 companies (56 out of 93) have issued negative EPS guidance and 40% of S&P 500 companies (37 out of 93) have issued positive EPS guidance. These percentages are equal to the five-year averages for S&P 500 companies issuing negative and positive EPS guidance for a quarter.

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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The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.

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John Butters

Vice President, Senior Earnings Analyst

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His 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, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).

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The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.