Earnings season is approaching in a few weeks with early announcers of Alcoa (AA) and General Electric (GE) reporting on April 7 and April 17, respectively. This commentary reviews the earnings estimate per share (EPS) changes for the ten primary sectors in the S&P 500 Index (SPX) and the subsectors for the last sixty days.

EPS estimates have fallen off the cliff for six of the ten primary sectors in the S&P 500 Index. The most significant drop has come from the Consumer Discretionary and Materials sectors where earnings declines have been 50.11% and 59.95%, respectively. Earnings estimate relative "strength" can be seen in the area of Utilities, Consumer Staples, Healthcare, and Telecommunication System where these sectors declined eight percent or less over the last couple of months.

S&P Sector Earnings Estimate Adjustments


The Laggards

When drilling down on the Consumer Discretionary sector, the biggest problems have come from the Major Auto Manufacturers area with General Motors (GM) and Ford Motor (F) having seen their combined EPS decline by -$6.55 over the last 60 days.

Also seeing a similar pattern in declining EPS is the Independent Oil & Gas sector, which consists of twelve stocks. Over the last 60 days, EPS has declined -$4.08. The biggest EPS drops come from Anadarko Petroleum (APC), Apache (APA), and EOG Resources (EOG) with an average drop of more than sixty cents per share.

Finally, and not so surprisingly, Investment Brokerages have seen a setback in their EPS estimates over the last sixty days. E*TRADE Financial (ETFC), Charles Schwab (SCHW), and Legg Mason (LM) have seen estimates decline a total of -$2.50.

The "Winners"

Even though Telecommunications Systems has seen EPS decline the least (-2.26%) over the last sixty days, only one of the nine stocks that represent this group has seen an increase in EPS. Embarq Corp. (EQ) has seen EPS estimates rise from $1.25 to $1.30 per share over the last two months.

Another sector that has been weathering the economic storm better than others has been the Healthcare sector. Within this sector, net EPS estimates for these six stocks have increased $0.10. The growth came from one stock - Humana (HUM). The company has seen its earnings estimates rise $0.22 over the last sixty day period.

Utility stocks have also have been a beacon of hope for the bulls amid a slumping economic backdrop. Entergy (ETR), Exelon (EXC), Constellation Energy ( CEG), and Wisconsin Energy (WEC) are four companies who are in the Top 15 of SPX stocks in terms of EPS estimate growth over the last 60 days.

Finally, REITs (real estate investment trusts) have also done fairly well as a whole. Of the 15 stocks that comprise the REIT subsector in the SPX, EPS has gained a net $0.21 over the last 60 days. Plum Creek Timber (PCL) is a REIT that owns and manages timberlands in the United States. Earnings estimates have increased $0.86/share over the last sixty days.

To some degree, earnings estimate adjustments can be a bit of a "lagging" indicator -- but it is useful for investors & traders to get some perspective as to which market categories are being downgraded more than others.

Price Headley is the founder and chief analyst of BigTrends.com.