{"id":3824,"date":"2014-06-30T23:41:40","date_gmt":"2014-06-30T23:41:40","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=3824"},"modified":"2014-06-30T23:41:40","modified_gmt":"2014-06-30T23:41:40","slug":"6-30-14-historical-sp-500-revenue-growth","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=3824","title":{"rendered":"6.30.14: Historical SP 500 Revenue Growth"},"content":{"rendered":"

FCSP500revgro(qtrly)<\/a><\/p>\n

The above link shows the recent history of SP 500 revenue growth dating back to q1, 2000.<\/p>\n

Readers get to see the SP 500 over a few cycles, with my comments in the margins.<\/p>\n

What is fascinating to me is that, despite the fact that since July 1, 2012, or since q2, ’12, the SP 500 has not had a single quarter of 4% revenue growth or better, and yet, since June 30, 2012, the SP 500 is up about 44%, excluding dividends.<\/p>\n

The highest rate of revenue growth between q2 ’12 and q1 ’14 has been 3.6%. q2 ’14 is expected in roughly the same range.<\/p>\n

Note the revenue growth in mid-2011 too, nearly mid-teens or 15%, far better than the last few years and yet in mid-2011, from the May, 2011 high to the early October, 2011 low, the SP 500 corrected 20%.<\/p>\n

In 2011, the SP 500 year-over-year earnings growth was between 12% – 15%, while the SP 500 returned only 1% – 2% that year thanks to that mid-year correction.<\/p>\n

Next week, we’ll find out what ThomsonReuter’s consensus is looking for in\u00a0terms of q2 ’14 revenue growth, but Factset’s expectation for q2 ’14 revenue as of this weekend is 2.9%.<\/p>\n

Expect another low-single digit quarter of revenue growth.<\/p>\n

Having tracked this data over\u00a0the years, what fascinates me is that there is little “coincident” correlation between healthy earnings and revenue growth within the SP 500, and quarterly returns of the SP 500 itself.<\/p>\n

My landmark data point that proves this point precisely was 1994, when SP 500 earnings grew 19% and the SP 500 returned just 0% – 1% for the year, as Greenspan raised rates 6 times, the peso collapsed in late 1994, and Orange County defaulted thanks to some leveraged interest rate bets.<\/p>\n

We do pay attention to revisions in primarily EPS, particularly over 12 – 18 months timeframes. Revenues are harder to track.<\/p>\n

More data for reader’s digestion.<\/p>\n

The point of this post being that both earnings and revenue estimates are partially lagging indicators, and “forward guidance” by corporate managements is very important.<\/p>\n

We pay close attention to forward EPS and revenue revisions for our individual companies when doing our valuation work.<\/p>\n

Hope this hasn’t put you to sleep by now.<\/p>\n

Trinity Asset Management, Inc. by:<\/p>\n

Brian Gilmartin, CFA<\/p>\n

Portfolio manager<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

FCSP500revgro(qtrly) The above link shows the recent history of SP 500 revenue growth dating back to q1, 2000. Readers get…<\/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":[9,93,114],"tags":[],"class_list":["post-3824","post","type-post","status-publish","format-standard","hentry","category-sp-500","category-sp-500-forecasts","category-sp-500-revenue-growth"],"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\/3824","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=3824"}],"version-history":[{"count":5,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/3824\/revisions"}],"predecessor-version":[{"id":3843,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/3824\/revisions\/3843"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3824"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3824"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3824"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}