It’s been a terrible quarter for earnings estimates.
In the first quarter of 2015, earnings estimates for the S&P 500 were reduced by 8.2% per share as of last Friday, the worst quarter for a reduction in expectations since the first quarter of 2009, smack in the middle of the financial crisis.
S&P 500 earnings are now expected to fall 4.6% in the first quarter from prior expectations for growth of 4.2%.
And while the biggest decline in earnings estimates have come from companies directly tied to the crash in oil prices, earnings have been weak across all ten sectors of the S&P 500.
From FactSet’s John Butters:
The estimated earnings decline for the first quarter is -4.6% this week, above the estimated earnings decline of -4.5% last week. Small downward revisions to earnings estimates for companies in the Energy sectors accounted for much of the small increase in the expected earnings decline during the week. The estimated earnings decline for Q1 2015 of -4.6% is below the estimated earnings growth rate of 4.2% at the start of the quarter (December 31). All ten sectors have recorded a decline in expected earnings growth since the beginning of the quarter due to downward revisions to earnings estimates, led by the Energy, Materials, and Consumer Discretionary sectors. The Energy sector has witnessed the largest increase in the expected earnings decline (to -64.1% from -29.8%) since the start of the quarter.
Now while the decline in earnings expectations is the largest since the first quarter of 2009, the magnitude isn’t close to the downward revisions we saw back then, as earnings estimates were reduced by 26.8% back then.
If the 4.6% decline in earnings stands, it will serve as the largest quarterly decline since the 15.5% drop in earnings seen during the third quarter of 2009.
And overall, 84% of companies (85 out of 101) that have provided guidance quarter to date have given negative guidance, above the 5-year average of 68%.