The energy sector is currently experiencing a downturn relative to the broader S&P 500 index, reaching new cycle lows and approaching levels seen during the Covid-19 pandemic. Analysts have been revising earnings per share (EPS) estimates downward for S&P 500 companies, with Q2 2025 EPS estimates lowered by 4.0% in April and May, exceeding the 10-year average decline of 2.5% for this period. All 11 S&P 500 sectors saw decreases in Q2 EPS estimates, with the energy sector leading the declines. For the full year 2025, EPS estimates have been cut by 3.5% since December 31, again surpassing the 10-year average reduction of 2.3%. Ten out of 11 sectors recorded EPS estimate decreases over the past five months, with the energy sector being the most affected. Despite these challenges, the energy sector remains the most undervalued in the S&P 500, trading at about 14 times earnings compared to 16 to 16.5 times for other sectors, according to Lou Basenese, EVP of market strategy at Prairie Operating Co.