During each corporate earnings season, it is not unusual for companies to provide guidance on expected earnings for future quarters or for the full year. Heading into the second quarter earnings season, 184 S&P 500 companies that historically had provided annual EPS guidance either withdrew or did not provide annual EPS guidance, mainly due to uncertainty about the future impact of COVID-19. On the other hand, 101 S&P 500 companies provided annual EPS guidance. Heading into the third quarter earnings season, how many S&P 500 companies have continued to not provide or have withdrawn EPS guidance for 2020 or 2021? How many S&P 500 companies are providing EPS guidance for 2020 or 2021?
To answer these questions, FactSet searched for comments on annual EPS guidance in the Q2 earnings releases, presentations, and conference call transcripts for the 285 S&P 500 companies that have historically provided annual EPS guidance.
Of these 285 companies, 147 (52%) stated that they were not providing EPS guidance or confirmed a previous withdrawal of EPS guidance for either FY 2020 or FY 2021. Almost all of these companies cited the uncertainty of the future economic impacts of COVID-19 as the reason for not providing or withdrawing EPS guidance for the full year. At the sector level, the Consumer Discretionary (33) and Industrials (27) sectors had the highest number of companies withdrawing or not providing annual EPS guidance.
On the other hand, 138 S&P 500 companies provided EPS guidance for FY 2020 or FY 2021. Of these 138 companies, 59 provided annual EPS guidance that was higher than the previous guidance issued by the company, 41 maintained previous (annual) EPS guidance, 26 provided annual EPS guidance that was lower than the previous guidance issued by the company, and 12 initiated annual EPS guidance (no prior guidance issued). At the sector level, the Health Care (31) and Utilities (26) sectors had the highest number of companies issuing annual EPS guidance.
Thus, slightly more S&P 500 companies are not providing annual EPS guidance (147) than providing annual EPS guidance (138) heading into the peak weeks of the third quarter earnings season.
However, it should be noted there was a 37% increase in the number of S&P 500 companies providing annual EPS guidance during the Q2 earnings season relative to the Q1 earnings season. This increase can be attributed to an uptick in the number of companies reissuing annual EPS guidance during the Q2 earnings season after withdrawing or not providing annual EPS guidance during the Q1 earnings season. Overall, 37 S&P 500 companies that withdrew or did not provide annual EPS guidance during the Q1 earnings season provided annual EPS guidance during the Q2 earnings season.
It should also be noted that there was a substantial increase in the number S&P 500 companies issuing annual EPS guidance that was higher than the previous guidance issued by the company during the Q2 earnings season (59) relative to the Q1 earnings season (11). On the other hand, there was a significant decrease in the number of S&P 500 companies issuing annual EPS guidance that was lower than the previous guidance issued by the company during the Q2 earnings season (26) relative to the Q1 earnings season (45).
Given the increase in the number of S&P 500 companies providing annual EPS guidance in Q2 after withdrawing annual EPS guidance in Q1 and the increase in the number of S&P 500 companies issuing annual EPS guidance above previous guidance, it does appear that some S&P 500 companies have better visibility on future earnings heading into the third quarter earnings season than they did heading into the second quarter earnings season. Given that most S&P 500 companies have only one quarter remaining in their fiscal year, it would seem likely the number of S&P 500 companies issuing EPS guidance for 2020 will increase again during the third quarter earnings season.
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