Overall, 107 S&P 500 companies have issued quarterly EPS guidance for the first quarter. Of these companies, 68 have issued negative EPS guidance and 39 have issued positive EPS guidance.
The number of companies issuing negative EPS guidance is above the 5-year average of 57 and above the 10-year average of 62. On the other hand, the number of companies issuing positive EPS guidance for the fourth quarter is below the 5-year average of 42 but above the 10-year average of 38.
As a result, the percentage of companies issuing negative EPS guidance for Q1 is 64% (68 out of 107), which is above the 5-year average of 57% and above the 10-year average of 62%.
What is driving the higher number of S&P 500 companies issuing negative EPS guidance for Q1? At the sector level, the Information Technology sector has the highest number of companies issuing negative EPS guidance of all 11 sectors at 26. This sector also has the largest increase in the number of companies issuing negative EPS guidance for Q1 relative to its 5-year average at +6.
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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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.
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