How have 2019 SP 500 Earnings Growth Estimates Changed ?

WalMart (WMT) officially ends the Q3 ’18 earnings season this week, with their report Thursday morning.

Looking ahead to next year and to answer the headline question directly, “Not Much” is probably the best answer.

Let’s look at the data: (Source: IBES by Refinitiv)

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With the exception of the sharp drop in Q3 ’19 earnings growth expectations, 2019 SP 500 growth estimates have remained relatively stable the last 3 – 4 months.

A Run through the Weekly Numbers:

  • Fwd 4-qtr est: $172.17
  • PE ratio: 16x
  • PEG ratio: 0.77x
  •  SP 500 earnings yield: 6.19%
  • Y/y growth of fwd est: +20.9% vs last weeks 21.7%

Summary / conclusion: The 2% rally in the SP 500 this week brought the key benchmark back above its 200-day moving average, as the SP 500 and the major equity indices continue to recover from the October ’18 drawdown. WalMart (WMT), Cisco (CSCO), and a couple of semiconductor companies like Nvidia (NVDA) and Applied Materials (AMAT) report this week. The Semiconductor sector has gotten pounded since it peaked in Q1 ’18. The sector is extremely difficult to trade, and my experience with the sector is that it takes 12 – 18 months for the sector to bottom after it start to correct, although that depends on the stock and the company.

The semiconductor sector is approaching oversold on the weekly chart.

2019 SP 500 earnings growth estimates – so far anyway – have shown little change from earlier blog posts here which addresses Technology specifically, and here which shows the 2019 estimate still at $177.25 (the 2019 estimate is $177.25) versus a higher 2018 estimate.

2019 SP 500 earnings has slowed but because the 2018 estimate has risen, not that 2019 has declined.

More to come this weekend.

Thanks for reading.





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