SP Weekly Earnings Update: Not Much Change – Revisions Remain Positive

Starting the earnings update with a Twitter post from Ryan Detrick of LPL Financial. In particular note the sector return data.

Sector performance YTD in ’21 is simply mirroring commodity price movements, probably not a surprise to many. Here are the sectors with the biggest increase in expected EPS growth estimates for 2021:

  • Energy – since 12/31/20, the expected EPS growth for 2021 has increased from 672% to 767%, which is deceptive since we were dealing with negative numbers for 2020. Still the 30% return for the sector in 2021 speaks for itself. Energy fell 6% – 7% this week on the sharp drop in crude oil on Thursday, 3/18/21.
  • Basic Materials: +7.5% YTD for the sector, the expected sector EPS growth has increased from 30% to 39% since 12/31/20. Examining Morningstar’s portfolio data on the Basic Materials ETF XLB, it is populated with a lot of names I’ve never followed.
  • Consumer Discretionary and Communication Services are both seeing their expected EPS growth forecasts reduced for 2021, both by about 1,000 basis points or 10%.
  • Technology, Health Care and the Financial sectors are all seeing modest upward EPS growth revisions since 12/31/20 for the full-year 2021 forecast. This blog updated the Tech sector’s quarterly EPS expectations last night and the revisions continue higher.

SP 500 Weekly Earnings data (source IBES data by Refinitiv)

  • The forward 4-quarter SP 500 EPS estimate jumped to $175.60 this week from $174.91 last week. 
  • The PE ratio is 22x the expected ’21 estimate.
  • The SP 500 earnings yield is 4.48% vs 4.44% last week and 4.23% as of 12/31/20.
  • Here’s a change: the “average” combined 2020 and 2021 expected SP 500 EPS growth has increased to 6%.
  • The expected 2021 SP 500 EPS growth rate is now 25% versus 23% as of 12/3120.


SP 500 EPS “rate of change” 

Note the 12-week rate of change for the SP 500 forward estimate curve.


Once again the following table shows the upward revisions to 2021 quarterly EPS growth rates.

However, note how expected quarterly revenue growth rates have slowed, at least for this week (far right columns).

Summary / conclusion:  There will be more on the Tech sector this weekend for readers, but there is little change to the upward revision pressure on SP 500 EPS estimates as a whole, which has been in evidence for the last 9 – 11 months. What’s interesting for readers is the sector behavior and performance this year is pretty much inline with the SP 500 earnings data from IBES / Refinitiv. While Energy is a little deceptive given the drop in crude oil in 2020 and then comparing expected 2021 growth rates to negative numbers, the Basic Materials sector has seen a nice surge in EPS estimates this year.

As the revisions slow into month and quarter end, and analysts await Q1 ’21 data, there is little new in terms of SP 500 EPS trends and revisions.

Revisions remain mostly positive,

Thanks for reading.

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