Second-quarter S&P 500 earnings are expected to decline by 43.5%, with revenues falling by 11.5%, according to FactSet, the largest year-over-year drop since Q4 2008 (-69.1%).
By the numbers: Estimated earnings per share for the second quarter have decreased by 36.2% since March 31.
- That's more than 10 times the five-year average and the largest decrease in a quarter since FactSet began tracking the data in 2002.
The earnings picture is being clouded by a lack of forward guidance.
- Through Friday, 183 S&P 500 companies had withdrawn or confirmed a previous withdrawal of annual EPS guidance for fiscal year 2020, FactSet senior earnings analyst John Butters said in a note.
- Only 48 companies have issued guidance for Q2 — with 27 providing negative EPS guidance and 21 issuing positive ones — less than half of the five-year average for a quarter (107).
- Even with the small sample size, the percentage of companies issuing positive guidance (56%) is well below the five-year average of 69%.
On the other side: As EPS estimates have fallen, price-to-earnings ratios have skyrocketed toward record highs.
- The 12-month forward P/E ratio for the S&P 500 is 21.2, significantly above the 5-year average (16.8) and 10-year average (15.1) for the index.
Between the lines: The one sector in the S&P 500 that has not seen a significant negative impact to earnings guidance is utilities.
- Utilities were, by far, the sector with the highest number of companies to confirm previous EPS guidance for 2020 and are projected to have the highest year-over-year earnings growth of all eleven sectors at 2.4%.