Heading into the end of the third quarter, 103 S&P 500 companies have issued EPS guidance for the quarter. This number is above the five-year average of 100. Of these 103 companies, 47 have issued negative EPS guidance and 56 have issued positive EPS guidance. The number of companies issuing negative EPS guidance is well below the five-year average of 61, while the number of companies issuing positive EPS guidance is well above the five-year average of 39.
If 56 is the final number of S&P 500 companies issuing positive EPS guidance for the quarter, it will mark the fourth highest number of S&P 500 companies issuing positive EPS guidance for a quarter since FactSet began tracking this metric in 2006. The current record is 67, which occurred in the previous quarter (Q2 2021).
Assuming there is no change in the positive and negative numbers, the third quarter will also mark the fifth straight quarter in which more S&P 500 companies issued positive EPS guidance than negative EPS guidance for a quarter. This is the longest streak of quarters with positive guidance exceeding negative guidance since FactSet began tracking this metric in 2006.
One of the key drivers is the high number of companies issuing positive revenue guidance for the third quarter. As of today, 87 S&P 500 companies have issued revenue guidance for the third quarter. Of these 87 companies, 22 have issued negative revenue guidance and 65 have issued positive revenue guidance. If 65 is the final number of S&P 500 companies issuing positive revenue guidance for the quarter, it will mark the third highest number since FactSet began tracking this metric in 2006. The current record is 71, which occurred in Q1 2021.
At the sector level, the Information Technology sector has the highest number of companies issuing positive EPS guidance and positive revenue guidance of all 11 sectors for the quarter. In terms of EPS guidance, 27 companies in the Information Technology sector have issued positive EPS guidance for the third quarter, which is well above the five-year average of 18 for this sector. If 27 is the final number for the quarter, it will mark with the third highest number of companies issuing positive EPS guidance for this sector since FactSet began tracking this metric in 2006. The current record is 29, which occurred in Q4 2020. In terms of revenue guidance, 43 companies in the Information Technology sector have issued positive revenue guidance for the third quarter, which is well above the five-year average of 25 for this sector. If 43 is the final number for the quarter, it will tie the mark (with Q1 2021) for the second highest number of companies issuing positive revenue guidance for this sector since FactSet began tracking this metric in 2006. The current record is 44, which occurred in the previous quarter (Q2 2021).
While more S&P 500 companies have issued positive EPS guidance than negative EPS guidance for the third quarter, there has been an increase in the negative numbers and a decrease in the positive numbers relative to the previous quarter. The number of S&P 500 companies issuing negative EPS guidance has increased by 10 compared to Q2 2021 (to 47 from 37), while the number of S&P 500 companies issuing positive EPS guidance has decreased by 11 compared to Q2 2021 (to 56 from 67). At the sector level, the Health Care (to 10 from five) and Information Technology (to 15 from 11) sectors have seen the largest increases in the number of companies issuing negative EPS guidance for Q3 2021 relative to Q2 2021, while the Health Care (to five from nine) and Industrials (to six from 10) sectors have seen the largest decreases in the number of companies issuing positive EPS guidance for Q3 2021 relative to Q2 2021.
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.
Listen to Earnings Insight on the go! In our weekly Earnings Insight podcast, John Butters provides an update on S&P 500 corporate earnings and related topics based on his popular Earnings Insight publication. The podcast is made available every Monday—listen on Apple podcasts, Spotify, or factset.com.
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.