Estimate Revisions Still Very Positive – Q4 ’17 Earnings Start Shortly




Click to enlarge


The late selloff today wasn’t really expected, but then again neither was the seemingly uneventful market response to the signing of the first meaningful tax reform since 1986.

President Trump signed the final tax reform bill on December 22nd, and the close for the SP 500 that day was 2,683.34. Today’s close for the SP 500 was 2,673.61, to end 2017.

One aspect to SP 500 earnings is that EPS revisions – up revisions vs. downward revisions – remain very “robust” and healthy – the trend in revisions if you look at the key reporting periods for 2017 is that upward revisions are growing each quarter.

3rd quarter earnings – and really the 3rd week of November saw 67% of revisions being upward – the highest percentage in some time.

If readers look at the spreadsheet and study the weeks highlighted in black marker, which are the prime earnings reporting period each quarter – readers can see the positive trends.

Q4 ’17 earnings begin with the big banks reporting January 12th, 2018.

There will be a few posts forthcoming this weekend so we’ll keep this short.

Here is the final week of Thomson Reuters I/B/E/S earnings data “by the numbers” for 2017: 

  • Fwd 4-qtr est: $143.34 vs $142.88 from last week
  • P.E ratio: 18.7x
  • PEG ratio: 1.62x
  • SP 500 earnings yield: 5.36%
  • Year-over-year growth of fwd estimate: The expected year-over-year growth of the forward estimate finishes ’17 at a high for the year of +11.49%, vs last week’s +11.15%.

The earnings data and particularly the year-over-year growth rate continues to push higher, which should be a plus for the stock market.

I have to admit the market’s reaction to the final signing of the tax reform bill is somewhat puzzling, but let’s see how Q4 ’17 earnings play out.

The 4th quarter financial results should be positive and we’ll hear about cash repatriation at that time and what companies will do with their savings from lower corporate tax rates.

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Your email address will not be published.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.