Nice Bump in “Forward 4-Quarter” SP 500 Earnings Estimate

Moving into January, 2017, here is the Thomson Reuters I/B/E/S data by the numbers:

  • Forward 4-qtr est: $132.73, up from $128.57 last week, and typical with the roll into the new quarter.
  • P.E ratio: 17(x)
  • PEG ratio: 3.5(x)
  • SP 500 earnings yield: 5.83% vs. last week’s 5.74%
  • Year-over-year growth of forward estimate: +4.81%vs last week’s 5.03%.

Analysis / conclusion:┬áThe “forward 4-quarter” estimate is now basically the calendar-year 2017 estimate. The bottom-up calendar year 2017 estimate is $132.61 versus the forward 4-quarter estimate of $132.73, so the difference is minor.

If you read yesterday’s blog post here, you’ll see how the sell-side analysts have turned decidedly negative each of the first quarters of the last 3 years in terms of “positive vs. negative” revisions.

We’ll see if this happens again this year, but I doubt it.

Several big banks report Friday morning, January 13, ’17. JP Morgan (JPM), Wells Fargo (WFC) and Bank of America (BAC).

Per Thomson, the Financial sector’s y/y earnings growth is expected at 15.7% in Q4 ’16. Per Factset, Goldman Sachs (GS) and AIG (AIG) are the two biggest positive contributors to the sector.

Long JPM, GS.

Thanks for reading today.


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