{"id":12620,"date":"2022-02-18T16:29:01","date_gmt":"2022-02-18T22:29:01","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=12620"},"modified":"2022-02-18T16:29:01","modified_gmt":"2022-02-18T22:29:01","slug":"sp-500-weekly-earnings-update-sp-500-earnings-yield-at-another-multi-month-high","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=12620","title":{"rendered":"SP 500 Weekly Earnings Update: SP 500 Earnings Yield at Another Multi-Month High"},"content":{"rendered":"<p>A couple interesting metrics jumped out on the SP 500 EPS spreadsheet this week:<\/p>\n<ul>\n<li>The SP 500 EPS estimate has risen from $223 to $225 in the first 6 &#8211; 7 weeks of 2022;<\/li>\n<li>The PE has fallen from 21x in early January &#8217;22 to 19x as of February 18, 2022;<\/li>\n<li>The SP 500 earnings yield has now hit a high of 5.18%, the highest since March &#8211; April, 2020.<\/li>\n<\/ul>\n<p>Here&#8217;s a rundown of the metrics provided each week:<\/p>\n<ul>\n<li>The forward 4-quarter EPS came in this week at $225,41, up from $225.15 last week and the year&#8217;s start of $223;<\/li>\n<li>The PE ratio this week ended at 19.2x after the weekly loss for the SP 500 of -1.50%<\/li>\n<li>The SP 500 earnings yield jumped to 5.18% versus 5.09% last week;<\/li>\n<\/ul>\n<p>In March, 2020, the SP 500 earnings yield rose to 6.5%, and then again in December &#8217;18 it rose to 7%. This week&#8217;s 5.18% doesn&#8217;t sound like much, but it&#8217;s relatively high for the last 2 years.<\/p>\n<p>5 of the 7 weeks to start 2022 have seen the SP 500 end the week with a negative return.<\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/2022expsectorgrorates21822.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-12621\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/2022expsectorgrorates21822-300x191.png\" alt=\"\" width=\"300\" height=\"191\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/2022expsectorgrorates21822-300x191.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/2022expsectorgrorates21822-150x95.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/2022expsectorgrorates21822-768x488.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/2022expsectorgrorates21822.png 810w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>This table from IBES by Refinitiv shows how the SP 500 sectors are expected to look in terms of EPS growth in 2022 versus 2021.<\/p>\n<p>The village idiots out there most of whom don&#8217;t even follow SP 500 earnings are using the expected 7% &#8211; 8% EPS growth rate for 2022 as a reason to be bearish, while 2022 is really all about tougher comp&#8217;s against 2021, particularly for technology and financial sectors.<\/p>\n<p>Energy investors will face tougher comp&#8217;s as 2022 progresses.<\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/Sp500q421q122epsrevgrorates21822.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-12622\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/Sp500q421q122epsrevgrorates21822-300x127.png\" alt=\"\" width=\"300\" height=\"127\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/Sp500q421q122epsrevgrorates21822-300x127.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/Sp500q421q122epsrevgrorates21822-1024x432.png 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/Sp500q421q122epsrevgrorates21822-150x63.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/Sp500q421q122epsrevgrorates21822-768x324.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2022\/02\/Sp500q421q122epsrevgrorates21822.png 1035w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>This table which uses IBES data by Refinitiv but is proprietary creation, shows that Q4 &#8217;21 will end very strong.<\/p>\n<p>However note the revenue growth for 2022 by quarter: the strongest &#8220;expected&#8221; rate of revenue growth will be Q1 &#8217;22 and then it will gradually decline into Q4 &#8217;22.<\/p>\n<p>Don&#8217;t take this as gospel though: analyst estimates since the pandemic started have been exceptionally conservative and every quarter since Q1 &#8217;20 has seen very strong upside surprises.<\/p>\n<p>Im expecting 2022 will be relatively &#8220;normal&#8221; year earnings-wise.<\/p>\n<p><em><strong>Summary \/ conclusion:<\/strong><\/em> With Q4 &#8217;21 earnings reporting season unofficially ending this week with Walmart&#8217;s release (and both Walmart and Cisco &#8211; two 1990&#8217;s growth giants &#8211; saw strong reports and higher stocks following their earnings release) investors will look at March &#8217;22 earnings releases which will have a February &#8217;22 end dat for their reporting periods. In other words, we start to see what early &#8217;22 looks like for a number of companies.<\/p>\n<p>Ukraine is a complete wild card, but I expect Q1 &#8217;22 will be another decent quarter of large-cap earnings. The above spreadsheet is still expecting 10% revenue growth for Q1 &#8217;22 and that&#8217;s been constant the last 5 &#8211; 6 weeks when the overall SP 500 has been pretty weak in terms of price action.<\/p>\n<p>The interest rate outlook can influence stock and bond valuations, but not necessarily company operations depending on it&#8217;s capital structure, etc.<\/p>\n<p>The SP 500 earnings yield got my attention this week.<\/p>\n<p>None of this is advice and take it all with substantial skepticism. Ukraine can change the markets quickly, and it may be entirely discounted already.<\/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>A couple interesting metrics jumped out on the SP 500 EPS spreadsheet this week: The SP 500 EPS estimate has&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-12620","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\/12620","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=12620"}],"version-history":[{"count":5,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/12620\/revisions"}],"predecessor-version":[{"id":12627,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/12620\/revisions\/12627"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12620"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12620"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12620"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}