8.9.14: SP 500 Weekly Earnings Update: q4 ’14 Earnings Growth Shaping Up Very Nicely

Per Thomson Reuter’s, “This Week in Earnings”, the forward 4-quarter estimate for the SP 500 fell this week to $126.78 from last week’s, $127.00.

The p.e ratio on the forward estimate is 15.2(x), while the PEG ratio is 1.60(x).

The earnings yield on the SP 500 is 6.56%, versus last week’s 6.6%.

The year-over-year (y/y) growth rate of the forward estimate fell to 9.53%, from last week’s 9.58%.

Analysis / commentary: With 450 of the SP 500 having reported, ex the Citigroup charge, q2 ’14 earnings growth is 10% as of Friday, August 8th, 2014, a growth rate we haven’t seen since 2011. Yahoo Finance ran a story in early July saying that q2 ’14 could hit 10% and I didn’t think it would happen. My best guess for q2 ’14 was 9% – 9.5%, which could still happen since q2 ’14 earnings season doesn’t officially end until this week’s Wal-Mart (WMT) earnings report, but the fact is earnings are solid. The point is YahooFinance’s forecast was right on the money.

Given all the pundit commentary on CNBC, earnings and earnings data is reminiscent of that oft-quoted, country-house lawyer phrase, “I can argue it either way”.

Earnings data is often twisted to be used by both bulls and bears alike.

Revenue growth for q2 ’14 is now expected at 4.4%, still small in percentage terms, but a little bit stronger than the 3% – 3.5% coming into the quarter.

Since July 1, q3 ’14 and q4 ’14 earnings estimates have┬áNOT seen their typical erosion. This bodes very well for the remainder of the year. It isn’t a forecast or prediction, but I expect q4 ’14 to see the typically strong SP 500 action in what is typically the seasonally strongest part of the year anyway. The fact that not only are q3 and q4 ’14 earnings not getting revised lower, but are staying constant, is a very positive indicator.


Here are q3 and Q4 ’14 SP 500 earnings growth expectations as of Friday, August 8th, and then July 1:

q3 ’14: +9.3% today, +11% as of July 1

q4 ’14 +12.2% today, vs +12% as of July 1.

q4 ’14’s expected earnings growth is actually higher on August 8th, than on July 1 – that is big.


We’ll be out with more over the weekend, and early next week.

Thanks for reading.

Trinity Asset Management, Inc. by:

Brian Gilmartin, CFA

Portfolio manager




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