By this time next week, we will have the September Jobs report in hand, (scheduled for release at 7:30 am central time, on October 3rd, 2014) and we will see a nice jump in the “forward 4-quarter” EPS estimate for the SP 500.<\/p>\n
Given that this week’s estimate is $125.67, my guess for next week’s “forward 4-quarter” estimate is $129.50 to $130.00.<\/p>\n
Each quarter, as we roll into the new quarter, as we will this week on October 1 ’14, we roll forward 1-quarter on our “forward 4-quarter” estimate.<\/p>\n
This is one reason I think there is an upward bias to stocks in general and to the SP 500: the emphasis on growth and “return” is the silent catalyst that keeps the profit engine moving forward. The P.E the market assigns to that growth is always the $64,000 question. It is always the great unknown.<\/p>\n
This week, the last full week of the quarter, the “forward 4-quarter” estimate fell slightly to $125.67, from last week’s $125.79.<\/p>\n
The p.e ratio on the forward estimate is 15.78(x) and the PEG ratio as of Friday, September 26th, is 1.76(x).<\/p>\n
The earnings yield after this week’s decline of 1.37% in the SP 500 is 6.34%, up from last week’s 6.25%.<\/p>\n
More importantly\u00a0after an\u00a08-week slide\u00a0in the year-over-year (y\/y) forward 4-quarter growth rate, the growth rate jumped this week to 8.95% from last week’s 8.56%. Basically the growth rate fell every week from August 1st forward, which isn’t abnormal since the growth rate jumped sharply in July ’14 during the heart of earnings season.<\/p>\n
Here is a quick detail of the change\u00a0each of the past three month’s of the y\/y forward 4-quarter growth rate<\/strong><\/em>:<\/p>\n July ’14: from 5.40% on July 4 to 9.58% on August 1:<\/p>\n Aug ’14: from 9.58% on Aug 1 to 9.18% on Aug 29:<\/p>\n Sept ’14: from 9.15% on Sept 5 to 8.95% on Sept 26;<\/p>\n Analysis \/ commentary:<\/strong><\/em> this could be navel-gazing at its finest but we watch closely the y\/y change in the forward estimate growth rate. So far the end of September’s growth rate is higher than early July’s.<\/p>\n q3 ’14 earnings start in 2 weeks, and the current estimate per Thomson Reuters’s, “This Week in Earnings” is 6.6% growth for q3 ’14. Expect that to come in close to 10% again\u00a0by the time we reach the end of December ’14.<\/p>\n