Overall, 106 S&P 500 companies have issued quarterly EPS guidance for the fourth quarter. Of these companies, 71 have issued negative EPS guidance and 35 have issued positive EPS guidance.
The number of companies issuing negative EPS guidance is above the 5-year average of 56 and above the 10-year average of 62. This quarter also marks the fifth time in the past eight quarters that more than 70 S&P 500 companies have issued negative EPS guidance. On the other hand, the number of companies issuing positive EPS guidance for the fourth quarter is below the 5-year average of 42 and below the 10-year average of 38.
As a result, the percentage of companies issuing negative EPS guidance is 67% (71 out of 106), 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 Q4? At the sector level, the Information Technology, Industrials, and Consumer Discretionary sectors have the highest number of companies issuing negative EPS guidance of all 11 sectors. These three sectors also have the largest increases in the number of companies issuing negative EPS guidance for Q4 relative to their 5-year averages.
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 of 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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