With 493 of the SP 500 having reported 2nd quarter earnings, the “forward 4-quarter” estimate slipped a whopping $0.05 this week to $126.28 from last week’s $126.33.<\/p>\n
With the SP 500 closing at an all-time high today of 2003, the p.e ratio on the SP 500 increased this week to 15.9(x), while the PEG ration finished the week and month at 1.73(x).<\/p>\n
The earnings yield on the SP 500 fell this week to 6.305 from last week’s 6.35%.<\/p>\n
The y\/y growth rate on the forward estimate fell again this week to 9.18%, has now fallen for 5 straight weeks and has declined 40 bp’s from 8\/1\/14’s peak of 9.58%.<\/p>\n
The July\u00a011 ’14 y\/y growth rate was 8.53% so the growth rate accelerated through July ’14 and has now decelerated through August ’14.<\/p>\n
Am I worried ? No, given the absolute growth rate is still a healthy 9.18% and close to a 3-year record high, but this is why we track it.<\/p>\n
I’d rather see it rise slowly and steadily over time.<\/p>\n
Analysis \/ commentary:<\/strong> <\/em>2nd quarter earnings growth will finish at +10.2% excluding the Citigroup charge, and q2 ’14 revenue growth will likely finish up near 4.6%, both of which are good metrics. Health Care was the sector stand-out: from July 1 ’14 through August 29, 2014, Health Care growth increased from 8.2% to 18.6% – that is a big upside surprise.<\/p>\n Per Thomson Reuters, the top-down estimate for 2014 is currently projected at $117.49. The bottoms-up estimate for calendar 2014 (also per Thomson Reuters) is currently projected at $119.25. My guess is, when 2014 is all reported by 4\/1\/15, the actual SP 500 EPS will be at least $120.<\/p>\n $120 versus 2013’s $109.68 is 9.5% y\/y growth for 2014, with the SP 500 trading today at just under 16(x) the forward estimate.<\/p>\n Let’s say the SP 500 p.e expands to 19(x) or 2(x) the expected growth rate for 2014 EPS of 9.5% given the above numbers, then you\/we\/ I could make a good case for a 12 – 15 month target on the SP 500 of 2,340 or another 17% higher from here.<\/p>\n It feels funny to write that, as in it might be the source of great ridicule upon my person or character, but I also wonder how many would have ventured forth on CNBC in March, 2000, and without hesitation or equivocation, have said to sell all your Technology exposure and buy gold ?<\/p>\n The math is the math.<\/p>\n It could be wrong too.<\/p>\n One of the reasons, I suspect the SP 500 has had trouble expanding to 2(x) its growth rate, is that Financials haven’t really participated as actively as they have in\u00a0past bull markets. As a sector, Financials did well in ’13, but have turned punk for the most part in 2014.<\/p>\n Sentiment has turned bullish this week too – don’t like to see that.<\/p>\n More on this over the weekend.<\/p>\n We get more retail reporting this coming week. The only company we will really be locked in on will be Toll Brothers, (TOL) the high-end homebuilder,\u00a0that reports Wednesday, 9\/3\/14 pre-market.<\/p>\n Thanks for reading our\/my little corner of the world. There are a lot of blogs and Twitter handles competing for your eyeballs. Thanks for reading ours…<\/p>\n We’ll be out with much more over the weekend.<\/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":" With 493 of the SP 500 having reported 2nd quarter earnings, the “forward 4-quarter” estimate slipped a whopping $0.05 this…<\/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":[9,98,93,114,74,91],"tags":[],"class_list":["post-4037","post","type-post","status-publish","format-standard","hentry","category-sp-500","category-sector-earnings-growth-estimates","category-sp-500-forecasts","category-sp-500-revenue-growth","category-tol","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\/4037","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=4037"}],"version-history":[{"count":2,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/4037\/revisions"}],"predecessor-version":[{"id":4039,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/4037\/revisions\/4039"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4037"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4037"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4037"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}