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Expecting earnings to rebound in the third quarter? Think again

Investors who are banking on an improvement in earnings when the third-quarter reporting season kicks off in October should start bracing for disappointment.

Sales and profit warnings have been piling up in recent weeks, and the stocks of companies issuing them are being punished more severely than usual, according to FactSet.

See also:Wave of profit and sales warnings puts spotlight on new risks companies face

Of the 114 S&P 500 companies to issue earnings-per-share guidance so far, 80, or 70%, have been negative versus the 34 that were positive. While that’s below the five-year average of 74%, companies are offering EPS outlooks that are 16.3% below analyst expectations on average, wider than the five-year average of 9.7%.

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