8.18.14: SP 500 Weekly Earnings Update: SP 500 on Track for 10% Earnings Growth in 2014

Apologies for the delay in getting this out this week.

The forward 4-quarter estimate for the SP 500 fell slightly for the week ended 8/15/14 to $126.58, from the prior week’s $126.78.

The p.e ratio on the forward estimate is now 15.45(x). The PEG ratio is 1.64(x).

The “earnings yield” on the SP 500 as of Friday’s close was 6.47%.

The year-over-year (y/y) growth rate on the forward estimate fell to 9.40% from the prior week’s 9.53%. Still healthy and closing in on 10%, which is where I would expect we will end 2014.

Analysis / commentary: For q2 ’14, the y/y earnings growth for the SP 500 is officially over 10% to 10.1% (if Citigroup’s numbers are excluded), per Thomson Reuter’s This Week in Earnings. The growth rate of the forward estimate is now also closing in on 10% which means consensus analyst expectations are getting more optimistic, despite what is a subdued growth rate of high single digits.

Q2 ’14 earnings season officially ended with Wal-Mart’s (WMT) report this past week. 466 of the SP 500 have now reported q2 ’14 earnings.

Because of the delay in getting this out to readers this weekend, we will keep the summary short and sweet.

Although we waffled on the forecast, we thought SP 500 earnings growth could hit 10% in 2014, and with p/e expansion t0 2(x) that growth rate or 20(x) earnings, the SP 500 could still have a decent year.

We are expecting a strong q4 ’14 both for SP 500 earnings and for the return on the SP 500.

Watch the July ’14 high for the SP 500 of 1,991. A heavier volume trade above 1,991 and our q4 ’14 rally could have started early this year.

Trinity Asset Management, Inc. by:

Brian Gilmartin, CFA

Portfolio manager

 

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