SP 500 Weekly Earnings Update: Year-over-year “expected” growth now +8%

Long-time readers know this blog tracks the the year-over-year growth rate of the forward SP 500 estimate, which dollar estimate is given weekly by Thomson Reuters I/B/E/S, “This Week in Earnings”.

The year-over-year growth rate is my calculation for readers, and it really represents a kind-of “forward SP 500 earnings” curve. (That sounds fancy, and rather Wall Street’ish, but the forward 4-quarter estimate simply tracks the dollar changes in the SP 500 earnings estimate over the next 4 quarters, which is currently Q1 ’17 – Q4 ’17.)

Here is the this week’s data:

  • Forward 4-quarter SP 500 earnings estimate: $132.91 down slightly from last week’s $132.93
  • P.E ratio: 17.3(x)
  • PEG ratio: 2.16(x)
  • SP 500 earnings yield: 5.79% down from last week’s 5.85%
  • Year-over-year growth rate of the forward estimate: +8%, up from last week’s +6.75%.

Here is the trend in the y/y growth rate of the SP 500 forward estimate, a statistic all but ignored by the mainstream financial media:

  • 1/27/17: +8% ($132.91)
  • 12/30/16: +5.03% ($128.57)
  • 11/25/16: +4.03% ($128.56)
  • 10/28/16: +3.74% ($128.97)
  • 9/30/16: -1.18% ($125.09)

This blog has been tracking the forward estimate and its year-over-year growth rate since the year 2000. We’ve just finished a 24-month period from late 2014 to late 2016, where the y/y growth rate fell from the 9% range, to a low of -3% in early 2016, all due to the Energy sector drag.

Personally I’d love to see y/t growth rate in the forward estimate of 10% – that will be the highest “expected” growth rate in a very long time. The last time the SP 500 earnings grew 15%, was 2011, a year when the SP 500 suffered a 20% correction from May, 2011 through early October, 2011.

What is truly interesting about the data is that – even prior to the US Presidential election – the SP 500 forward earnings estimate was starting to rise rapidly.

There are several earnings-related articles in the pipeline, but year-end client lunches, dinners, meetings, etc. have kept the calendar full and the writing to a minimum.

Look for another article tomorrow.

Thanks for reading…




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