113 S&P 500 companies issued Q3 EPS guidance: 82 negative (above 5-year avg. of 74) and 31 positive.
Information Technology led with 29 negative guidance (+45% vs. avg. 20.1), driven by Semiconductors (9) and Software (7).
Health Care followed with 15 negative guidance (+40% vs. avg. 10.7), led by Equipment & Supplies (9) and Life Sciences Tools & Services (5).
Opinion
The surge in negative EPS guidance highlights growing challenges in key sectors. In Information Technology, trade tensions, supply chain disruptions, and softening global demand, especially in semiconductors and software, are pressuring earnings. Health Care faces regulatory uncertainty and rising operational costs, particularly in equipment and life sciences. Elevated negative guidance suggests heightened market risks and potential earnings headwinds for Q3.
Core Sell Point
An uptick in negative EPS guidance, driven by Information Technology and Health Care sectors, signals mounting earnings pressures amid trade tensions, regulatory challenges, and shifting market dynamics.
Heading into the end of the third quarter, 113 S&P 500 companies have issued EPS guidance for the quarter. Of these 113 companies, 82 have issued negative EPS guidance and 31 companies have issued positive EPS guidance. The number of companies issuing negative EPS for Q3 is well above the 5-year average of 74.
What is driving the unusually high number of S&P 500 companies issuing negative EPS guidance for the third quarter? At the sector level, the Information Technology and Health Care sectors are the largest contributors to the overall increase in the number of S&P 500 companies issuing negative EPS guidance for Q3 relative to the 5-year average.
In the Information Technology sector, 29 companies have issued negative EPS guidance for the third quarter, which is nearly 45% above the 5-year average for the sector of 20.1. If 29 is the final number for the quarter, it will mark the highest number of companies issuing negative EPS guidance in this sector since FactSet began tracking this data in 2006. The current high is 26 companies, which occurred in four different quarters (most recently in Q2 2019). At the industry level, the Semiconductor & Semiconductor Equipment (9) and Software (7) industries have the highest number of companies issuing negative EPS guidance in the sector. In the Health Care sector, 15 companies have issued negative EPS guidance for the third quarter, which is 40% above the 5-year average for the sector of 10.7. If 15 is the final number for the quarter, it will mark a tie for the second highest number of companies issuing negative EPS guidance in this sector since FactSet began tracking this data in 2006, trailing only Q1 2019 (16). At the industry level, the Health Care Equipment & Supplies (9) and Life Sciences Tools & Services (5) industries have the highest number of companies issuing negative EPS guidance in the sector.
The term “guidance” (or “preannouncement”) is defined as a projection or estimate for EPS provided by a company in advance of the company reporting actual results. Guidance is classified as negative if the estimate (or mid-point of a range estimates) provided by a company is lower than the mean EPS estimate the day before the guidance was issued. Guidance is classified as positive if the estimate (or mid-point of a range of estimates) provided by the company is higher than the mean EPS estimate the day before the guidance was issued.
