SP 500 Earnings Update: Revision Activity Should Slow Until Earnings Start in Early October

The next 5 weeks will be very slow for the number of SP 500 earnings revisions, as we are now in the slowest part of the quarter for revisions (and will be) until October ’21 earnings start.

Here is a table from IBEs by Refinitiv’s “This Week in Earnings”. Normally TWIE provides only 4 weeks of data at a time, but this spreadsheet was started to track weekly (since 2010) and you can see the slowdown during June ’21 and this will also likely happen in Sept ’21 for the total number of revisions (2nd column from left) seen within the benchmark.

Analysts won’t start to update their models until earnings start again in October.

SP 500 EPS – weekly data:

  • The forward 4-quarter estimate slipped two cents this weeks to $206.75 from $206.77 last week.
  • The PE ratio on the forward estimate is now 21.93x
  • The SP 500 earnings yield is 4.56% this week vs 4.59% last week. The earnings yield is still hovering around the 18 month high 4.66%.

Watching forward quarter growth rates: 

Source: IBES by Refinitiv data

The expected growth rate for SP 500 EPS and revenue didn’t change much this week. The bordered area is expected revenue growth for Q3 and Q4 ’21 and that’s what I’m looking at every week.

Keep an eye on 2022: 

This data is from IBES by Refinitiv’s “Earnings Scorecard” but this table above updates it weekly.

The expected EPS and revenue growth for the SP 500 will return to more normal growth rates in 2022, but we should start to see some revisions in Q1 22 growth rates when October ’21 earnings start. Some companies – particularly those with good growth and expect it to continue – will sometimes comment on their October earnings conference calls on the next calendar year, plus the analyst’s will extrapolate Q3 ’21 comments into Q4 ’21 and Q1 ’22 if beat rates and commentary is particularly positive or negative.

Summary / conclusion: For the next few weeks revision activity will likely slow and potentially be driven by “macro” events like Congress, like foreign countries, regulators (like the FDA), etc. SP companies are constantly appearing at conferences and events where speeches are made and their are always questions from the analysts on the current quarter, etc. so unless there is substantive news that is below the surface, the quarterly earnings reports are the source of most of the best fundamental news impacting individual companies.

Given the events of the last 4 – 5 quarters and the Fed out of the way until late September, it’s likely to be a quiet period for earnings revisions.

Oracle reports next Thursday, September 9th, 2021. Lululemon and Restoration Hardware also report this coming week. Clients are long some Oracle but it’s not a big position.

This blog update will likely be written late next weekend, if at all.

Thanks for reading.


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.