SP 500 Earnings: Still Solid, After Nvidia and Walmart, and a Look At Apple

We are looking at the last 5 weeks of the 4th quarter earnings for the SP 500, and with the unofficial end of Q4 ’23 earnings this week with Walmart’s report, despite the negativity about the quarter in November and December ’23, actual Q4 ’23 SP 500 EPS growth was +10% as of today.

Walmart’s guidance spooked the analysts a little, which resulted in very little upward revisions to EPS for calendar ’25 and ’26, despite the healthy revisions in Walmart’s revenue estimates. (More on this in a coming blog post.)

Nvidia has been talked about enough. There is very little that I can add to the story.

Apple EPS and revenue revisions: 

Apple EPS estimate revisions peaked in May ’22, bouncing around until 8/23.  Since August ’23, looking at each fiscal year Apple’s EPS negative revisions:

  • fy ’24: -1%
  • fy ’25: -2%
  • fy ’26: -7%
  • fy ’27: -3%

FY ends 9/30

From May ’22, Apple revenue estimate have seen downward revisions. Looking at the downward revisions, here is the percentage decline by fiscal year:

  • fy ’24: -11%
  • fy ’25: -12%
  • fy ’26: -17%

Those numbers are more than a little surprising, and not in a good way.

So what’s going on with Apple ? Hardware growth has been slower as the phone giant transitions into a services business. Are iPhone’s now a commodity ? Is Apple finding it harder to innovate around the iPhone ?

Looking at return data (courtesy of YCharts), here’s Apple’s and the SP 500’s annual return from 12/31/21 through 2/22/24:

  • Apple: +1.31%
  • SPXTR: +4.80%

Apple (the stock) been almost flat for 26 months.

Just sayin.

SP 500 data: 

  • The forward 4-quarter estimate (FFQE) this week increased to $242.76 from last week’s $242.57 and January 5th’s print of $243.98. (It’s a positive that the forward estimate is not being revised downward, as is the typical pattern.)
  • The PE on the FFQE is 21x, versus 20.7x last week, so we continue to see a little PE expansion;
  • The SP 500 earnings yield has now declined for 8 straight weeks, starting ’25 over 5% and now at 4.77%. Actually, better than expected SP 500 EPS is probably keeping it from falling further.
  • The Q4 ’23 bottom-up estimate is now $57.14, versus the early January ’24 estimate of $54.69;
  • The SP 500 EPS upside surprise is still at 6.8%; I thought maybe that would have been revised higher after NVDA and WMT.
  • The SP 500 revenue upside surprise is still at 1.1%

Summary / conclusion: Over the next several weeks we will start seeing February ’24 quarter end earnings releases for a host of companies, including Nike (NKE), Fedex (FDX), Micron (MU), and a host of others. There are no companies reporting next week that are followed by this blog.

The Apple revenue estimate revisions are interesting.

None of this is advice or a recommendation. Past performance is no guarantee or suggestion of future results. Investing can involve the loss of principal even over short periods of time. Readers should gauge their own comfort with portfolio volatility, and adjust accordingly. All EPS and revenue data for the SP 500 as well as individual companies are bought via a subscription through LSEG or the London Stock Exchange Group. Email tajinder.dhillon@LSEG.com for more information.

Thanks for reading.


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