5.2.14: Full-Year 2014 SP 500 Earnings Update – No P.E expansion this year

We are a little late getting this out, but I wanted to see what the SP 500 earnings growth would look like for q1 ’14 before updating our 2014 EPS scenario, which we wrote about here¬†earlier this year.

The FINAL, ACTUAL 2013 EPS number for the SP 500 came in at $109.68, just shy of our expected $110 final number.

Late in 2013 and early in 2014, we thought the final actual EPS number for 2014 would come in around $120, which would have meant 9.4% growth for calendar 2014 for SP 500 earnings.

Today, or as of last week’s data, the current bottoms-up estimate for the SP 500 for 2014 is $118.57, and the top-down estimate is $116.93.

Average the two and we get $117.75 or just 7.3% expected earnings growth for 2014.

Put a 2(x) PEG ratio on the 7.3% expected growth rate and the SP 500 should be trading at 14(x) – 15(x) forward earnings, or exactly where it is trading currently.

We will update q1 ’14 SP 500 earnings late tonight or early tomorrow morning. q1 ’14 earnings are coming in exactly where we expected at between 35 – 5%. We’ll also look at q2 ’14 revisions.

SP 500 are not the problem this year, given the 2.5% year-to-date return for the SP 500. We just aren’t seeing any P.E expansion as we did last year.

Thanks for reading and checking in…

We’ll update blog readers in the next 24 hours with our Weekly Earnings Update.

Trinity Asset Management, Inc. by:

Brian Gilmartin, CFA

Portfolio manager


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