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Energy Seeing Largest Upward Revisions to EPS Estimates to Date for Q2

By John Butters, Senior Earnings Analyst
May 29, 2015

During the first two months of the second quarter, analysts lowered earnings estimates for companies in the S&P 500 for the quarter. The Q2 bottom-up EPS estimate (which is an aggregation of the estimates for all the companies in the index) dropped by 2.1% (to $28.77 from $29.39) during this period. How significant is a 2.1% decline in the bottom-up EPS estimate during the first two months of the quarter? How does this decrease compare to recent quarters?

During the past year (four quarters), the average decline in the bottom-up EPS estimate during the first two months of the quarter has been 3.7%. During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during the first two months of the quarter has been 2.2%. During the past 10 years, (40 quarters), the average decline in the bottom-up EPS estimate during the first two months of the quarter has been 3.4%. Thus, the decline in the bottom-up EPS estimate recorded during the course of the first two months of the second quarter was lower than the one-year, five-year, and 10-year averages.

At the sector level, it is interesting to note that the Energy sector has reported the largest increase in the bottom-up EPS estimate for Q2 2015 of all 10 sectors through the first two months of the quarter. The Q2 bottom-up EPS estimate for the Energy sector has increased by 7.1% (to $4.40 from $4.11) since the start of the second quarter. Over this same time frame, the price of crude oil has increased by 21.2% (to $57.68 from $47.60).

However, it is important to note that the bottom-up EPS estimate for Q2 2015 for the Energy sector fell by 67.5% from September 30 through March 31 (to $4.11 from $12.67). This was by far the largest percentage decline in the bottom-up EPS estimate of all 10 sectors over this time frame. Despite the increase in estimated earnings over the past two months, this Energy sector is still predicted to report the largest year-over-year decline in earnings (-60.8%) of all 10 sectors.

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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