Weekly SP 500 Earnings Update: Sequential Increases in the Forward Estimate Continue

The forward 4-quarter estimate for the SP 500 returned to its familiar pattern of sequentially moving higher this week, printing $156.08 vs $155.98 last week. A small increase – yes – but still sequential improvement

Here is a picture of what the spreadsheet looks like tracking the IBES data by Refinitiv:

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What fascinates me is that since July 1, only two weeks of the last 16 have seen sequential declines in the forward estimate.

Geeky data “stuff” but numbers tell a story.

  • The forward 4-qtr estimate improved sequentially to $156.08 from last week’s $155.98;
  • The forward PE is 22x;
  • The SP 500 forward earnings yield fell a little bit this week to 4.49% from 4.64% last week;
  • The “average” expected calendar 2020 and 2021 SP 500 EPS growth fell to 3.5% this week, from a long string of 4% prints. Let’s see what the next few weeks hold;
  • The “expected” 2021 EPS of $166.22 is still above the 2019 actual EPS of $162.93;

SP 500 Forward earnings curve:

click to open / enhance

This week, note the “4-week rate of change”. The sequential increases continued this week, which is always a plus.

Looking at Next 4 Quarter’s Earnings and Rev Growth:

click to open / enhance

Showing the same data from various perspectives helps the reader see the y/y change in EPS and revenue growth for the SP 500.

Sector data will follow tomorrow.

EPS growth for Q3 ’20, Q4 ’20 and Q1 ’21 continue to slowly improve.

Let’s see what this table looks like next week after 15 financials report and readers can see what consumer and commercial credit losses look like.

This blog will have more on the Financial sector over the weekend.

Summary / conclusion: This weekly overview on the SP 500 numbers – both expected EPS and revenue growth – shows that the positive trends remain in place, but analysts are still somewhat sheepish to raise numbers in advance of seeing prints.

The financial sector will likely trade off expected vs actual credit losses. Tom Brown of Bankstocks.com thinks that credit losses will be “BTE” or better-than-expected”.

Walgreens reports next week too. One of my all-time favorite stocks which we haven’t owned for years, thanks to the brick-and-mortar model and reimbursement pressure. An earnings preview is coming over on Seeking Alpha before the Thursday morning report.

It’s all about banks, brokers and money managers reporting next week. More will be forthcoming over the long weekend.

Thanks for reading.

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