Entering last week, the percentage of companies that had raised forward guidance this earnings season had outnumbered the percentage of companies that had lowered guidance. As we highlighted in this post, a positive guidance spread is not something we’ve seen quite often in recent years, so we took notice.
Well, the fun didn’t last long. After another big batch of earnings reports last week, the guidance spread for this earnings season has flipped negative, meaning more companies have lowered guidance than raised guidance. We thought companies might finally turn a corner in terms of forecasting and sentiment, similar to what we’ve seen in the various consumer sentiment readings since the election last November. There’s still time for the spread to flip back positive before earnings season officially ends in a couple of weeks, but we’re not holding our breath for it.