{"id":10161,"date":"2020-04-24T17:13:02","date_gmt":"2020-04-24T17:13:02","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=10161"},"modified":"2020-04-24T17:13:02","modified_gmt":"2020-04-24T17:13:02","slug":"sp-500-earnings-weekly-update-averaging-expected-growth-rates-for-2020-and-2021","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=10161","title":{"rendered":"SP 500 Earnings Weekly Update: Averaging Expected Growth Rates for 2020 and 2021"},"content":{"rendered":"<p>One thing that&#8217;s been tracked for a while, but might be somewhat useful in this type of market environment where everyone is looking for some &#8220;pandemic allegory&#8221; is just averaging expected 2020 and 2021 full-year SP 500 growth rates.<\/p>\n<p>Here is what the progression looks like:<\/p>\n<ul>\n<li><em><strong>4\/24\/20: +4% <\/strong><\/em>average expected growth rate of SP 500 earnings for years 2020 and 2021<\/li>\n<li><em><strong>4\/17\/20: +5%<\/strong><\/em><\/li>\n<li><em><strong>4\/10\/20: +5%<\/strong><\/em><\/li>\n<li><em><strong>4\/3\/20: +6%<\/strong><\/em><\/li>\n<li><em><strong>3\/31\/20: +8%<\/strong><\/em><\/li>\n<li><em><strong>3\/27\/20: +7%<\/strong><\/em><\/li>\n<li><strong><em>3\/20\/20: +8%<\/em><\/strong><\/li>\n<li><em><strong>3\/13\/20: +9%\u00a0<\/strong><\/em><\/li>\n<li><em><strong>3\/6\/20: +9%<\/strong><\/em><\/li>\n<li><em><strong>2\/29\/20: +10%<\/strong><\/em><\/li>\n<li><em><strong>2\/21\/20: +10%<\/strong><\/em><\/li>\n<li><em><strong>2\/14\/20: +10%\u00a0<\/strong><\/em><\/li>\n<\/ul>\n<p>Source: actual EPS estimate data courtesy of IBES by Refinitiv<\/p>\n<p>The trend is not great. Can&#8217;t say I&#8217;m encouraged by this.<\/p>\n<p><em><strong>Tracking &#8220;rate of change&#8221;:\u00a0<\/strong><\/em><\/p>\n<p>&nbsp;<\/p>\n<figure id=\"attachment_10163\" aria-describedby=\"caption-attachment-10163\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/fundamentalis.com\/?attachment_id=10163\" rel=\"attachment wp-att-10163\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-10163\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/sp500rateofchg42420-300x160.png\" alt=\"\" width=\"300\" height=\"160\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/sp500rateofchg42420-300x160.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/sp500rateofchg42420.png 488w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-10163\" class=\"wp-caption-text\">click to open \/ enlarge<\/figcaption><\/figure>\n<p>&nbsp;<\/p>\n<p>This week&#8217;s sequential rate of decline in the bottom-up 2020 SP 500 estimate was the lowest rate of change since early April, which is a small, positive sign.<\/p>\n<p>However I wanted to show readers 2020 and 2021 SP 500 estimates and the rates of change, since I dont think it would good for the SP 500 if 2021&#8217;s SP 500 dollar estimate fell below the 2019 &#8220;actual&#8221; SP 500 EPS of $162.93.<\/p>\n<p><em><strong>Looking at SP 500 EPS dollar estimates:<\/strong><\/em><\/p>\n<p>Here are the current estimates:<\/p>\n<ul>\n<li><em><strong>2022<\/strong><\/em> &#8211; $190.85<\/li>\n<li><em><strong>2021<\/strong><\/em> &#8211; $170.04 (est) &#8211; currently expecting +26% growth next calendar year<\/li>\n<li><em><strong>2020<\/strong> <\/em>&#8211; $134.92 (est) &#8211; currently expecting a decline in 2020 of 17% y\/y<\/li>\n<li><em><strong>2019\u00a0<\/strong><\/em> &#8211; $162.93 (actual) 1 % y\/y growth<\/li>\n<\/ul>\n<p><em><strong>Summary \/ conclusion:<\/strong><\/em>\u00a0Navel gazing this earnings data from IBES by Refinitiv can drive you nuts, but during this correction, the question remains given the uncertainty of it all from a vaccine perspective, an economic perspective and an earnings perspective, is when do the forward revisions start to slow at a decelerating rate (or, in other words stabilize), and how much more stress does the SP 500 estimate have to endure ?<\/p>\n<p>I would not want to see the 2021 SP 500 estimate -currently estimated at $170.04 &#8211; to fall below 2019&#8217;s actual EPS of $162.93.<\/p>\n<p>Reviewing prior bear markets, the year 2000 peak SP 500 actual EPS print of $55.12 wasn&#8217;t exceeded until 2003&#8217;s $55.44 and only by a very thin margin.<\/p>\n<p>2006&#8217;s peak SP 500 actual EPS print of $88.18, wasn&#8217;t exceeded until 2011&#8217;s $97.82. (2010 was close at $85.12 but fell a little short.)<\/p>\n<p>The 2021 estimate, which will be affected by the November &#8217;20 Presidential election, will hopefully remain above 2019&#8217;s actual EPS of $162 per share.<\/p>\n<p>This is all very fluid &#8211; take all commentary and &#8220;expectation&#8221; with substantial skepticism, since it could change daily. The estimates will change daily too.<\/p>\n<p>Rates of change are very important &#8211; decelerating declines are very good news. Let&#8217;s give <a href=\"https:\/\/fundamentalis.com\/?p=10147\">the Tech sector and the &#8220;Big 5&#8221;<\/a> a chance to report earnings next week.<\/p>\n<p>Thank for reading.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>One thing that&#8217;s been tracked for a while, but might be somewhat useful in this type of market environment where&hellip;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[91],"tags":[],"class_list":["post-10161","post","type-post","status-publish","format-standard","hentry","category-weekly-earnings-update"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/10161","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10161"}],"version-history":[{"count":7,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/10161\/revisions"}],"predecessor-version":[{"id":10169,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/10161\/revisions\/10169"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10161"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10161"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10161"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}