Gartner said recently that 70% of S&P 500 companies have revised or completely withdrawn their earnings guidance due to the COVID-19 pandemic.
From the 416 companies that made earnings announcements through May 12, just 44 (11%) maintained their guidance and a further 80 (19%) either do not offer guidance or did not clarify guidance during the earnings call, the research firm noted.
Of the remaining 292 firms, 77 (21%) revised their guidance, a further 205 (49%) withdrew it altogether, Gartner observed.
Seventy-three firms (18%) made their guidance announcements by press release prior to the earnings call. Among these 73 companies, 63 (86%) withdrew guidance and 10 (14%) revised their guidance, the firm added.
“This provides a quantitative look at the depth of uncertainty company leaders are coping with at present,” said Steve Adams, director for the Gartner Finance practice. “Even in cases where companies maintained their guidance, this was met by skepticism from investors who felt that unchanged guidance was unrealistic in the current environment.”
Company leaders overwhelmingly pointed to an inability to forecast business performance beyond the very short term due to the uncertainty stemming from COVID-19, Gartner said.
Yet even looking at the very short term, most companies are not offering Q2 guidance either, the research firm pointed out.
In some cases, companies explicitly state in the Q&A section of the earnings call transcripts that withdrawal or revision is a prudent decision given the current circumstances, Gartner added.
In total, 205 companies (49%) withdrew guidance completely, according to Gartner.
From this number the largest proportion was from the industrials sector, with 40 firms making up 20% of withdrawals, Gartner observed, adding that this was followed by 27 firms from the consumer discretionary sector (19%) and 27 companies from the IT and financials sector (13%).
“It’s not surprising that the consumer discretionary sector accounts for a significant portion of the guidance withdrawals, as this sector includes hotels, restaurants and retail stores,” Adams said. “What may surprise some, however, is that industrials companies lead all other sectors in terms of withdrawals. This is partly because the industrials sector accounts for a significant portion of the S&P 500, but it also includes airlines, construction companies, and manufacturing companies — all of which are deeply struggling to forecast consumer demand across 2020.”