6.13.14: SP 500 Earnings Update: 2014 Shaping Up Well in Terms of Earnings Growth

Per Thomson Reuters, the “forward 4-quarter estimate” for the SP 500 rose $0.02 this week to $122.96.

The p.e on the forward estimate is now 15.75(x). The PEG ratio remains at 1.85(x).

With a forward p.e of roughly 16(x), and estimated SP 500 earnings growth rate of 2014 of 8% – 10%, there is still room for p.e expansion into year-end or the 4th quarter.

The earnings yield on the SP 500 as of June 13th, 2014 is 6.35%, up a smidge from last week.

The y/y growth rate of the forward estimate slipped slightly to 8.51% this week, from 8.59% last week.

Color commentary: as we approach the end of the 2nd quarter, first quarter earnings are pretty much completed with 496 of the 500 SP 500 companies reporting. q1 ’14 earnings came in right where we thought they might at +5.6%. Growth looked grim in early April, but that is always the case. q2 ’14 earnings are still holding up with +6.8% y/y earnings growth expected, is still pretty robust relative to the last 8 – 10 quarters.  We get a good mix of earnings over the next two weeks across the SP 500, with Micron (MU – technology), Fed-Ex (FDX – transport / industrial), Oracle (ORCL – enterprise tech software), Lennar (LEN – homebuilder), and solid retailers like WAG and NKE, and Bed Bath & Beyond (BBBY).

We try and look at SP 500 earnings over multiple timeframes, and the full-year 2014 SP estimates currently call for +9.1% earnings growth for the year, for the major benchmark.

Not much new here to detail. SP 500 earnings are supportive of this market.

The Energy (+10.8% YTD per the SPDR ETF) and Utility (+12.09% per SPDR ETF) sectors are leading the SP 500 year-to-date, but the fastest earnings growth is expected to come from Health Care (+12.2%) and Technology (+10.4%) per the Thomson Reuters data.

The companies that report over the next two weeks, will give us a good look at companies with quarters ending May 31, so we get a new sector data points on SP 500 earnings over the next 16 days.

Wish there was more to write about on earnings. The 2nd quarter will likely be decent growth as the numbers and trends look now. q2 ’14 earnings start getting released around July 10th.

We owe readers an update on SP 500 revenue growth. Coming shortly.

Trinity Asset Management, Inc. by:

Brian Gilmartin, CFA

Portfolio manager








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