SP 500 Earnings Yield Jumps to 6.11%

The SP 500 earnings yield ended Friday, March 23, 2018 at 6.11%, higher than the 6% print on February 9th, 2018.

Of course since the week of February 9th, the SP 500 forward estimate has risen from $157.28 to this week’s $158.02.

The SP 500 index fell 5.95% on the week.

The 10-year Treasury yield still has not closed below the 2.788% low of the week of 2/15/18 despite the equity market weakness.

Thomson Reuters data by the numbers: 

  • Fwd 4-qtr est: $158.02
  • P.E ratio: 16.4x
  • PEG ratio: 0.79x
  • SP 500 earnings yield: +6.11% vs last week’s +5.75%
  • Y/Y growth of the fwd estimate: +20.71% vs last week’s +20.8%.

The SP 500 is now sitting near key technical support from the lows of Fenruary 8th and February 9th, with Friday’s close in the SP 500 at 2,588.26.

February 8th low: 2,580.56

February 9th low: 2,532.69

The February 9th flush is another 50 SP 500 points lower than Friday’s close so if Monday morning’s open is ugly and lower, that is your line in the sand.

With an ugly open Monday morning, the SP 500 earnings yield could get really attractive. Prior to this latest SP 500 flush, the last time the SP 500 sported a 6% earnings yield, were the weeks prior to the Presidential election in November, 2016, and for that stretch, the SP 500 earnings yield was over 6% for 5 straight weeks.

It isn’t a hard-and-fast metric or buy signal, but an SP 500 earnings yield above 6% has typically meant good value for the SP 500.

The SP 500 earnings yield is calculated by dividing the current “forward 4-quarter estimate” by the closing value of the SP 500: $158.02 / 2,588.26 = 6.1%.

Thanks for reading.

 

 

 

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