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

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.

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.

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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