{"id":11027,"date":"2020-11-28T08:57:50","date_gmt":"2020-11-28T14:57:50","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=11027"},"modified":"2020-11-28T08:57:50","modified_gmt":"2020-11-28T14:57:50","slug":"sp-500-earnings-little-change-in-the-positive-trends-seen-this-year","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=11027","title":{"rendered":"SP 500 Earnings: Little Change in the Positive Trends Seen This Year"},"content":{"rendered":"<p><a href=\"https:\/\/fundamentalis.com\/?p=11019\">Last night&#8217;s post<\/a> on examining &#8220;average, annual&#8221; returns for the SP 500 over various time frames was burning a hole in the pocket so to speak. Hopefully readers find it somewhat useful.<\/p>\n<p>One time period left off last might&#8217;s post was the 11.78% average, annual return from 1\/1\/2015 to 12\/31\/19.<\/p>\n<p>Using an end date of 11\/27\/20, the return is probably a little above that today, but a little below the longer-term average for the SP 500.<\/p>\n<p><em><strong>SP 500 Earnings:\u00a0<\/strong><\/em><\/p>\n<ul>\n<li>The forward 4-quarter estimate today is $160.08 vs the $159.90 from last week. Since September 30th, the forward 4-quarter estimate has risen from $146.00 per share and in the last month the forward estimate has risen from $158.32.<\/li>\n<li>The PE on the forward estimate is 22.7x<\/li>\n<li>The SP 500 earnings yield is 4.40% remaining somewhat constant around 4.5% as the forward SP 500 EPS estimate is revised higher with the rising stock market.<\/li>\n<li>The &#8220;average&#8221; 2021 &#8211; 2021 expected SP 500 EPS growth rate is now 3% down from it&#8217;s remarkable run of 4% for so long.<\/li>\n<li>The expected 2021 SP 500 EPS estimate is now over $168, At one point I worried it would not stay above the 2019 actual EPS print of $162.93.<\/li>\n<\/ul>\n<p><em><strong>SP 500 Forward earnings curve:\u00a0<\/strong><\/em><\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2020\/11\/fwdearningscurve112720.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-11028\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2020\/11\/fwdearningscurve112720-300x149.png\" alt=\"\" width=\"300\" height=\"149\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2020\/11\/fwdearningscurve112720-300x149.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2020\/11\/fwdearningscurve112720-1024x508.png 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2020\/11\/fwdearningscurve112720-150x74.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2020\/11\/fwdearningscurve112720-768x381.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2020\/11\/fwdearningscurve112720.png 1490w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>The &#8220;rate of change&#8221; of the 2021 EPS estimate for the SP 500 is slowing slightly. That&#8217;s why the average growth rate for 2020 and 2021 SP 500 EPS dropped as written above.<\/p>\n<p>We&#8217;ll know more with 2021 guidance given with Q4 &#8217;20 earnings starting January 10th, 2021. This picture is muddled too give that so many companies are opting for giving no guidance at all, which is probably why Q2 &#8217;20 and Q3 &#8217;20 earnings and revenue generated such strong upside surprises.<\/p>\n<p><em><strong>Trends in expected growth rates the next 4 quarters:\u00a0<\/strong><\/em><\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2020\/11\/q3q420expgrorates112720.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-11031\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2020\/11\/q3q420expgrorates112720-287x300.png\" alt=\"\" width=\"287\" height=\"300\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2020\/11\/q3q420expgrorates112720-287x300.png 287w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2020\/11\/q3q420expgrorates112720-143x150.png 143w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2020\/11\/q3q420expgrorates112720.png 687w\" sizes=\"auto, (max-width: 287px) 100vw, 287px\" \/><\/a><\/p>\n<p>Contrary to popular opinion, once we start to see Q4 &#8217;20 results starting around January 10th, the 4th quarter results becomes old news. Expected y\/y growth isn&#8217;t scheduled to return until Q1 and Q2 &#8217;21, which results won&#8217;t be known until April &#8217;21 with Q1 &#8217;21 results.<\/p>\n<p>Hence watch the &#8220;rate of change&#8221; in the forward quarters expected growth rates.<\/p>\n<p>Looks good so far.<\/p>\n<p><em><strong>Summary \/ conclusion: <\/strong><\/em>In the next 4 weeks we get companies reporting their November 30 &#8217;20 quarter, like Nike, and Costco, and Micron Technology and Accenture, and a host of others which gives a good cross-study of the US economy. The lack of a new stimulus package and the end of the extra unemployment benefit in late July &#8217;20 hasn&#8217;t seemed to adversely impact the economic data, other than a slight softening in US jobless claims.<\/p>\n<p>December 14th&#8217;s electoral college vote is a big deal, although I suspect President-elect Biden will prevail. My biggest concern for 2021 is a Blue Wave after January 5th Senate race runoff&#8217;s in Georgia, followed by much higher taxes, both corporate and personal. Hope that is unfounded.<\/p>\n<p>There is too much bullishness presently in the US stock market. I&#8217;m seeing a number of +20%, +25% expected SP 500 return predictions for 2021. Given that, I&#8217;m starting to think the SP 500 returns low-single-digits in 2021. Bullish sentiment is rampant. Hate to see that.<\/p>\n<p>Take everything you read here with a healthy skepticism. The capital markets can change quickly for reasons that as of today, are completely unknown. (Look at the lesson of Covid-19.)<\/p>\n<p>Thanks for reading.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Last night&#8217;s post on examining &#8220;average, annual&#8221; returns for the SP 500 over various time frames was burning a hole&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-11027","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\/11027","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=11027"}],"version-history":[{"count":4,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/11027\/revisions"}],"predecessor-version":[{"id":11034,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/11027\/revisions\/11034"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11027"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11027"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11027"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}