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S&P 500 Price and EPS Estimate Both Finish Down For Second Straight Quarter

By John Butters, Senior Earnings Analyst
Oct 2, 2015

During 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 estimates for all the companies in the index) dropped by 3.5% (to $29.01 from $30.07) during this period. How significant is a 3.5% decline in the bottom-up EPS estimate during a 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 a quarter has been 5.3%. During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 3.6%. During the past 10 years (40 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 5.1%. Thus, the decline in the bottom-up EPS estimate recorded during the course of the third quarter was lower than the one-year average, the five-year average, and the 10-year average for a quarter.

The value of the S&P 500 also declined during the third quarter. From June 30 through September 30, the value of the index decreased by 6.9% (to 1920.03 from 2063.11). As a result, the third quarter marked the second consecutive quarter in which both the bottom-up EPS estimate and the value of the index fell during the course of the quarter. The last time the index witnessed a decline in both the bottom-up EPS estimate and the value of the index for two straight quarters was four years ago (Q2 2011 and Q3 2011).

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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