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Largest Cuts to S&P 500 EPS Estimates in First Half of a Quarter since Q2 2009 due to Energy

By John Butters, Senior Earnings Analyst
Feb 13, 2015

During the first half of Q1 2015, analysts lowered earnings estimates for companies in the S&P 500 for the first quarter. The Q1 bottom-up EPS estimate (which is an aggregation of the estimates for all the companies in the index) dropped by 7.4% (to $27.31 from $29.48) during the first half of the quarter. How significant is a 7.4% decline in the bottom-up EPS estimate during the first half of the quarter? How does this decrease compare to recent quarters?

During the past year (4 quarters), the average decline in the bottom-up EPS estimate during the first half of the quarter has been 2.3%. During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during the first half of the quarter has been 1.6%. During the past ten years, (40 quarters), the average decline in the bottom-up EPS estimate during the first half of the quarter has been 2.8%. Thus, the decline in the bottom-up EPS estimate recorded during the first half of the first quarter was higher than the 1-year, 5-year, and 10-year averages.

In fact, this marks the largest percentage decrease in the bottom-up EPS estimate for the S&P 500 for the first half of a quarter since Q2 2009 (-7.5%)

Most of the reductions to earnings estimates have occurred in the Energy sector. This Q1 bottom-up EPS estimate for this sector has fallen by 48.6% (to $4.31 from $8.38) during the first half of the quarter, which is the largest decline for all ten sectors.

In fact, this marks the largest percentage decrease in the bottom-up EPS estimate for the Energy sector to date for an entire quarter (not just the first half of a quarter) since FactSet began tracking the data in 2002. Prior to Q1 2015, the largest percentage decrease in the bottom-up EPS estimate for the Energy sector for an entire quarter was -42.0% in Q2 2009.

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

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