{"id":8222,"date":"2018-10-12T20:40:46","date_gmt":"2018-10-12T20:40:46","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=8222"},"modified":"2018-10-12T20:40:46","modified_gmt":"2018-10-12T20:40:46","slug":"sp-500-earnings-yield-ends-week-at-6-27","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=8222","title":{"rendered":"SP 500 Earnings Yield Ends Week at 6.27%"},"content":{"rendered":"<p>The combination of a $4.89 increase in the forward 4-quarter estimate two weeks ago, and then the 4% drop in the SP 500 this week, has produced an usually high S&amp;P 500 earnings yield of 6.27%.<\/p>\n<p>Looking at my own spreadsheet data to see when the last time that happened, the last week of January and then February, 2016, the SP 500 earnings yield put in a series of prints between 6.25% &#8211; 6.50%.<\/p>\n<p>Usually anytime the SP 500 gets to 6% there is a bid in the market shortly, so getting above 6.10% has been a struggle.<\/p>\n<p>Refinitiv IBES data:<\/p>\n<ul>\n<li><em><strong>Fwd 4-qtr est:<\/strong><\/em> $173.57 vs last week&#8217;s $173.61<\/li>\n<li><strong><em>PE ratio:<\/em><\/strong> 15.9x<\/li>\n<li><em><strong>PEG ratio:<\/strong><\/em> 0.71x<\/li>\n<li><em><strong>SP 500 earnings yield:<\/strong><\/em> 6.27% vs last weeks 6.02%<\/li>\n<li><em><strong>Year-over-year growth of fwd estimate:<\/strong><\/em> +22.32%, the fourth straight week of deceleration.<\/li>\n<\/ul>\n<p>This blog has written about the SP 500 earnings yield many times over the years, and I&#8217;ve noted that typically any print over 6% is usually a buy signal, for longer-term investors. Of course that ignores the dampening effect of interest rate increases. Here are some previous posts on the earnings yield in the last few months,<a href=\"https:\/\/fundamentalis.com\/?p=7830\"> here<\/a>, <a href=\"https:\/\/fundamentalis.com\/?p=7667\">here<\/a> and <a href=\"https:\/\/fundamentalis.com\/?p=7518\">here<\/a>.<\/p>\n<p>The SP 500 saw a nice bump from the TC&amp;JA in early 2018, as lower corporate tax rates boosted earnings per share (read the last link).<\/p>\n<p>We&#8217;ll see what happens &#8211; the reaction to bank earnings today, was not a good feeling. PNC noted that loan growth was down on what looked to be early payoffs. Corporations are flush with cash with lower tax rates. That should help buybacks. I&#8217;m staying with the Financial sector overweight, although I&#8217;m puzzled with the revenue and earnings growth of Energy and Financials, why the sectors trade like dead wood.<\/p>\n<p>Thanks for reading.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The combination of a $4.89 increase in the forward 4-quarter estimate two weeks ago, and then the 4% drop in&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":[162],"tags":[],"class_list":["post-8222","post","type-post","status-publish","format-standard","hentry","category-sp-500-earnings-yield"],"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\/8222","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=8222"}],"version-history":[{"count":3,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/8222\/revisions"}],"predecessor-version":[{"id":8225,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/8222\/revisions\/8225"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8222"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8222"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8222"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}