S&P 500 Q3 EPS Down 2.5% by FactSet

During the first two months of the third quarter, analysts lowered earnings estimates for companies in the S&P 500 for the quarter. The Q3 bottom-up EPS estimate (which is an aggregation of the EPS estimates for all the companies in the index) dropped by 2.5% (to $29.88 from $30.64) during this period. How significant is a 2.5% decline in the bottom-up EPS estimate during the first two months of a quarter? How does this decrease compare to recent quarters?

Related: S&P 500 Earnings Decline for Fifth Consecutive Quarter

During the past year (four quarters), the average decline in the bottom-up EPS estimate during the first two months of a quarter has been 3.9%. During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during the first two months of a quarter has been 3.4%. During the past 10 years, (40 quarters), the average decline in the bottom-up EPS estimate during the first two months of a quarter has also been 3.8%. Thus, the decline in the bottom-up EPS estimate recorded during the first two months of the third quarter was smaller than the one-year, five-year, and 10-year averages.

As the bottom-up EPS estimate declined during the first two months of the quarter, the value of the S&P 500 increased during this same time frame. From June 30 through August 31, the value of the index increased by 3.4% (to 2170.95 from 2098.86). This quarter marked the 16th time in the past 20 quarters in which the bottom-up EPS estimate decreased during the first two months of the quarter while the value of the index increased during the first two months of the quarter.

Sector Highlights

At the sector level, the Energy sector witnessed the largest percentage decline in the bottom-up EPS estimate of all ten sectors at -24.0% (to $1.63 from $2.15). The value of the S&P 500 Energy sector also declined during this time frame. From June 30 through August 31, the value of the S&P 500 Energy sector decreased by 1.4% (to 505.45 from 512.39).

Read more about earnings trends in this edition of FactSet Earnings Insight. Visit www.factset.com/earningsinsight to launch the latest report.