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No Change in S&P 500 EPS Estimate for Q2 During Month of April

Companies and Earnings

By John Butters  |  May 7, 2018

During the month of April, upward and downward revisions to company-level earnings estimates by industry analysts resulted in virtually no change in the aggregate earnings estimate for the S&P 500 for the second quarter. The Q2 bottom-up EPS estimate (which is an aggregation of the median EPS estimates for all the companies in the index) was essentially unchanged (to $38.96 from $38.98) during this period. Is it significant that the bottom-up EPS estimate remained flat (0.0%) during the first month of a quarter? How does this lack of change in the aggregate estimate compare to recent quarters?

On average, the bottom-up EPS estimate usually decreases during the first month of a quarter. During the past five years (20 quarters), the bottom-up EPS estimate has recorded an average decline of 1.8% during the first month of a quarter. During the past 10 years (40 quarters), the bottom-up EPS estimate has recorded an average decline of 2.3% during the first month of a quarter. During the past 15 years (60 quarters), the bottom-up EPS estimate has recorded an average decline of 1.6% during the first month of a quarter.

At the sector level, five sectors recorded an increase in their bottom-up EPS estimate during the first month of the quarter, led by the Energy sector (+5.6%). Six sectors recorded a decrease in their bottom-up EPS estimate during the first month of the quarter, led by the Industrials sector (-2.2%). However, eight sectors recorded a smaller decrease (or an increase) in their bottom-up EPS estimate relative to their five-year average decline and 10-year average decline over the first month of the quarter. Six sectors recorded a smaller decrease (or an increase) in their bottom-up EPS estimate relative to their 15-year average decline for the first month of a quarter.

While the bottom-up EPS estimate for the second quarter remained flat during the month of April, the value of the S&P 500 increased slightly during this same period. From March 31 through April 30, the value of the index increased by 0.3% (to 2648.05 from 2640.87).

Change in S&P 500 EPS in first month of Q

Change in Q2 EPS vs price change

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John Butters

Senior Earnings Analyst

John’s 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, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.

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