{"id":10469,"date":"2020-07-24T13:39:40","date_gmt":"2020-07-24T19:39:40","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=10469"},"modified":"2020-07-24T13:39:40","modified_gmt":"2020-07-24T19:39:40","slug":"sp-500-weekly-earnings-update-song-remains-the-same-steady-improvement-in-forward-quarters","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=10469","title":{"rendered":"SP 500 Weekly Earnings Update: Song Remains the Same &#8211; Steady Improvement in Forward Quarters"},"content":{"rendered":"<p>Led Zeppelin&#8217;s great tune notwithstanding, the SP 500 earnings patterns for Q3, Q4 &#8217;20 and into early 2021 remain positive.<\/p>\n<p>The &#8220;forward 4 -quarter&#8221; estimate actually rose for the third week in a row this week, when in normal times (although nothing is really normal about 2020) there is typically a slow, downward drift into the coming quarter.<\/p>\n<ul>\n<li>This week: $143.79<\/li>\n<li>Last week: $143.25<\/li>\n<li>2 weeks ago: $142.98<\/li>\n<\/ul>\n<p>That&#8217;s just one metric but it tells us that the heavy downward pressure after late March &#8217;20 on forward estimates was likely too severe and now the Street is pulling up their forward numbers, albeit slowly.<\/p>\n<p>The 2021 estimate this week came in at $163.31, the 7th straight week of that number winding up in the &#8220;$163&#8221; area and it looks to be stabilizing. Some put little weight on the 2021 number, but I wanted to point the trend out to readers. The 2021 Sp 500 EPS estimate remains above 2019&#8217;s actual EPS of $162.93.<\/p>\n<p><em><strong>The Forward Earnings Curve:\u00a0<\/strong><\/em><\/p>\n<figure id=\"attachment_10470\" aria-describedby=\"caption-attachment-10470\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/fundamentalis.com\/?attachment_id=10470\" rel=\"attachment wp-att-10470\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-10470\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/fwdearningscurve72120-300x119.png\" alt=\"\" width=\"300\" height=\"119\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/fwdearningscurve72120-300x119.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/fwdearningscurve72120-768x305.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/fwdearningscurve72120-1024x406.png 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/fwdearningscurve72120.png 1508w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-10470\" class=\"wp-caption-text\">click to open \/ expand \/ enhance<\/figcaption><\/figure>\n<p>&nbsp;<\/p>\n<p>Refinitiv published the quarterly and annual EPS data for both historical quarters and the forward estimates, so this table simply sums the quarterly bottom-up estimates for the SP 500 and then shows the bucket as something resembling a forward earnings curve for the SP 500.<\/p>\n<p>Note the rates of change for both sequential and weekly periods.<\/p>\n<p>For the 7\/21\/20 period, look at the belly of the SP 500 earnings curve: while getting &#8220;less negative&#8221; the last 8 weeks, the revisions are now positive the last two weeks.<\/p>\n<p><em><strong>Q3 &amp; Q4 &#8217;20 specifically:\u00a0<\/strong><\/em><\/p>\n<figure id=\"attachment_10471\" aria-describedby=\"caption-attachment-10471\" style=\"width: 242px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/fundamentalis.com\/?attachment_id=10471\" rel=\"attachment wp-att-10471\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-10471\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/q3q420SP500epsrevgro72120-242x300.png\" alt=\"\" width=\"242\" height=\"300\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/q3q420SP500epsrevgro72120-242x300.png 242w, https:\/\/fundamentalis.com\/wp-content\/uploads\/q3q420SP500epsrevgro72120.png 439w\" sizes=\"auto, (max-width: 242px) 100vw, 242px\" \/><\/a><figcaption id=\"caption-attachment-10471\" class=\"wp-caption-text\">click to open \/ enhance \/ expand<\/figcaption><\/figure>\n<p>&nbsp;<\/p>\n<p>Looking at the &#8220;expected&#8221; SP 500 EPS and revenue growth for Q# and Q4 &#8217;20 gives readers another perspective on the forward data for the end of 2020.<\/p>\n<p>The source data is always IBES by Refinitiv but i like to look at the numbers from different angles &#8211; readers can see the steady improvement in Q3 and Q4 &#8217;20 revenue from early May&#8217;s lows.<\/p>\n<p>While still negative in terms of y\/y growth, upward revisions and &#8220;less negative&#8221; growth rates are a good sign.<\/p>\n<p><em><strong>Summary \/ conclusion:\u00a0 <\/strong><\/em>Since this is being written before the close on Friday, July 21, 2020, the SP 500 value on the &#8220;forward earnings curve&#8221; is not the closing value for the day.<\/p>\n<p>More to come over the weekend.<\/p>\n<p>Remember all opinions are my own, and take everything here with great skepticism. An overbought stock market can decline as SP 500 earnings gradually improve.<\/p>\n<p>Markets can change quickly, and without warning as the Covid-19 action demonstrates.<\/p>\n<p>Thanks for reading.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Led Zeppelin&#8217;s great tune notwithstanding, the SP 500 earnings patterns for Q3, Q4 &#8217;20 and into early 2021 remain positive.&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-10469","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\/10469","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=10469"}],"version-history":[{"count":3,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/10469\/revisions"}],"predecessor-version":[{"id":10474,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/10469\/revisions\/10474"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10469"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10469"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10469"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}