Negative Guidance Leading Positive At 6-1 Ratio For S&P 500 In Q1 2015: FactSet

As Senior Earnings Analyst John Butters of FactSet points out, the first quarter of 2015 is shaping up to be a very poor quarter in terms of lack of positive forward guidance from S&P 500 firms. Butters notes that the number of firms offering negative guidance is only slightly above historical averages in the first quarter, but the number of companies offering positive guidance is the lowest since 2006.

Details on first quarter positive and negative guidance

So far in the first quarter of 2015, 85 companies in the S&P 500 have issued negative earnings guidance and just 16 companies have produced positive guidance. If 16 turns out to be the final tally of firms issuing positive EPS guidance for the quarter, it will mark the lowest number since the first quarter of 2006. Of note, the number of companies issuing negative EPS guidance for last quarter of 2015 is above the trailing five-year average at 76, but a hair below the trailing one-year average of 87 for a quarter.

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However, the number of firms reporting positive EPS guidance is well below both the trailing five-year average of 34, and the trailing one-year average of 27 for a quarter. If 16 ends up as the final number of S&P 500 members reporting positive guidance for the quarter, it will represent the lowest number since the first quarter of 2006 (13).

S&P 500 Negative Guidance

Also of interest, six sectors are on pace to tie their record for the lowest number of firms reporting positive earnings guidance for a quarter:

  • Consumer Discretionary (4)
  • Consumer Staples (0)
  • Energy (0)
  • Materials (0)
  • Telecom Services (0)
  • Utilities (0)

Strong dollar and FX volatility are frequently cited as reasons for negative guidance

Butters notes that two factors are contributing to the very small number of companies issuing positive guidance: the continuing strength U.S dollar and the recent volatility in global foreign-exchange rates. He points out that a number of firms who issued negative guidance for either the first quarter or for the full-year cited the impact of the stronger dollar and/or volatility in FX rates as reasons for their guidance.