Per Thomson Reuters, the “forward 4-quarter” EPS estimate for the SP 500 slipped $0.25 this past week to $119.33 versus last week’s $119.58.<\/p>\n
The p.e ratio on the forward estimate rose to 15.4(x) and the PEG ratio rose a smidge last week to 2.49(x).<\/p>\n
The earnings yield on the SP 500 is 6.49% as of Friday, 2\/14\/14.<\/p>\n
The growth rate of the forward 4-quarter estimate fell last week to 6.19% from the prior week’s 6.38%.<\/p>\n
With about 400 of the SP 500 having reported q4 ’13 financial results, the +9.5% year-over-year growth rate for the index is the best growth rate since late 2011.<\/p>\n
Excluding Financials, the earnings growth rate is closer to 6%. However there is always “something” to be excluded from each quarter’s\u00a0earnings which reduces the growth rate: in early 2012, some pundits were removing AAPL’s results from the earnings growth rate and looking at the percentage change ex-APPL. (Long AAPL)<\/p>\n
We are keeping an eye on 2014’s full-year SP earnings growth rate, which currently stands at +9.2%, vs. the +10.8% on Jan 1, ’14. The only sector to see higher expected earnings growth for full-year 2014, this week vs. Jan 1 ’14 is Telecom, which has seen expected full-year growth expand from +13.5% to +15.9%.<\/p>\n
Q1 ’14’s expected earnings growth is +3.4% currently, versus the +6.5% expected on Jan 1. The q1 ’14 earnings pattern is resuming its previous pattern: the 3.4% will likely continue to get slashed until early April ’14 at which\u00a0point it will begin to rise. Only\u00a0Utilities is seeing better forecasted earnings growth\u00a0as of Friday\u00a02\/14\/14,\u00a0versus Jan 1 ’14: 8% vs +1.5%. \u00a0With the cuts to q1 ’14 GDP growth this week on the part of some high profile brokers, it is pretty clear a slower quarter of earnings and GDP growth is being built into the stock and bond markets.<\/p>\n
Given Utilities sensitivity to interest rates, is the projected positive revisions to q1 ’14 estimates, a tell on interest rates ?<\/p>\n
Given that Telecom is now marking-to-market their defined benefit plan pension expense, does that mean the positive Telco revisions are a tell for the stock market and interest rates in 2014 ? (When both stocks and interest rates rise, the funding of defined benefit plans of legacy SP 500 companies can improve markedly and in short order, as we saw in 2013.)<\/p>\n
Regarding earnings, there isn’t much to say this week, that hasn’t already been said. In early March we start to see Feb ’14 quarter-end results. That should be interesting.<\/p>\n
Q4 ’13 earnings growth at +9.5% is very strong. Still not to our 10% expectation yet, but not too shabby.<\/p>\n
Trinity Asset Management, Inc. by:<\/p>\n
Brian Gilmartin, CFA<\/p>\n
Portfolio manager<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
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