{"id":7264,"date":"2017-10-20T23:40:19","date_gmt":"2017-10-20T23:40:19","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=7264"},"modified":"2017-10-20T23:40:19","modified_gmt":"2017-10-20T23:40:19","slug":"sp-500-forward-earnings-curve-tells-a-good-story","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=7264","title":{"rendered":"SP 500 Forward Earnings Curve: Tells a Good Story"},"content":{"rendered":"<p>The forward 4-quarter estimate this week jumped to $142.25, up from last week&#8217;s $141.90, and what&#8217;s unusual about that is that &#8211; as we progress through a quarter &#8211; the trend is typically downward. (You&#8217;ve heard this here before.)<\/p>\n<p>So what&#8217;s happening with SP 500 earnings ? Well, analysts are getting more confident and increasing forward quarter estimates, versus &#8220;starting high and going low&#8221;.<\/p>\n<p>Here is what the forward earnings curve looks like ?<\/p>\n<figure id=\"attachment_7265\" aria-describedby=\"caption-attachment-7265\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/fundamentalis.com\/?attachment_id=7265\" rel=\"attachment wp-att-7265\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-7265\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/FC-fwdearnings-curve102017-300x124.png\" alt=\"\" width=\"300\" height=\"124\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/FC-fwdearnings-curve102017-300x124.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/FC-fwdearnings-curve102017-768x316.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/FC-fwdearnings-curve102017.png 833w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-7265\" class=\"wp-caption-text\">click to enlarge<\/figcaption><\/figure>\n<p>&nbsp;<\/p>\n<p>Pardon the small type: I&#8217;m a technological Luddite and still trying to work with Office 10 tools.<\/p>\n<p>The 2nd column on the spreadsheet is the &#8220;forward 4-quarter estimate&#8221; as we started this quarter: that would be the sum of the bottom-up estimates from Q4 &#8217;17 to Q3 &#8217;18.<\/p>\n<p>Note the first column though: that is the &#8220;forward 4-quarter estimate&#8221; as we roll into 2018, so it represents the 1-quarter forward, 4-quarter estimate.<\/p>\n<p>The stumbling block, and ive asked Thomson to publish the data is that they are not publishing the bottom up estimates for each quarter for 2019.<\/p>\n<p>But for the two &#8220;forward estimates&#8221;, as you scroll up the spreadsheet from 91\/1\/7 note, how little deterioration there is as time passes up to October 20, &#8217;17.<\/p>\n<p>Navel gazing ? Probably. Could too much be read into this data, this early ? Sure. Economic conditions can always change.<\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/?p=5953\">Here<\/a> was a post from May &#8217;16, noting the same pattern for 2017, which was validated this year.<\/p>\n<p>The fact is the US economy has been relatively stable, and it&#8217;s easier to make forecasts.<\/p>\n<p><em><strong>Thomson Reuters data (by the numbers from This Week in Earnings, 10\/20\/17)\u00a0<\/strong><\/em><\/p>\n<ul>\n<li><em><strong>Fwd 4-qtr estimate:<\/strong><\/em> $142.24<\/li>\n<li><em><strong>P.E ratio:<\/strong><\/em> 18.1(x)<\/li>\n<li><em><strong>PEG ratio:<\/strong><\/em> 1.79(x)<\/li>\n<li><em><strong>SP 500 earnings yield:<\/strong><\/em> 5.52%<\/li>\n<li><em><strong>Year-over-year growth of fwd estimate:<\/strong><\/em> +10.13% versus last week&#8217;s +9.8%.<\/li>\n<\/ul>\n<p>This is the second time this month, the growth rate of the forward estimate (last bullet) has moved over 10% &#8211; that growth rate finally looks to be turning higher and moving over 10% a longer duration.<\/p>\n<p>This metric has not been over 10% for any length of time, post-2008.<\/p>\n<p>Financials have caught a bid since our September &#8217;17 post <a href=\"https:\/\/fundamentalis.com\/?p=7159\">here<\/a>.<\/p>\n<p>Technology, Financials, and Health Care are still 53% of the SP 500 by market cap. No changes are planned until year-end &#8217;17 or early &#8217;18.<\/p>\n<p>Thanks for reading&#8230;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The forward 4-quarter estimate this week jumped to $142.25, up from last week&#8217;s $141.90, and what&#8217;s unusual about that is&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":[84,53,91],"tags":[],"class_list":["post-7264","post","type-post","status-publish","format-standard","hentry","category-financial-sector","category-financials","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\/7264","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=7264"}],"version-history":[{"count":3,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/7264\/revisions"}],"predecessor-version":[{"id":7268,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/7264\/revisions\/7268"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7264"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7264"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7264"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}