As we rolled into the new quarter this week, the period for measuring the “forward 4-quarter estimate” rolled forward from Q2 ’19 through Q1 ’20, to Q3 ’19 through Q2 ’20.<\/p>\n
That means the “forward 4-quarter” estimate rolled from last week’s $170.63 to this week’s new $174.87, or an increase of $4 and change, as we expected to happen a few weeks ago here<\/a>. ( The original estimate was for $175 – $176 so will readers say $174.87 is close enough for government work ? )<\/p>\n SP 500 data by the numbers:\u00a0<\/strong><\/em><\/p>\n (Source: This Week in Earnings, IBES by Refinitiv)<\/p>\n Summary \/ Conclusion:<\/strong><\/em>\u00a0 The two metrics that jumped out this week are the sharp drop in the PEG ratio, to a more normal 2.5x this week, but maybe more importantly, the “SP 500 earnings yield” rose on the week to 5.85% despite the 2.4% increase in both the SP 500 and the Nasdaq.<\/p>\n The reason the SP 500 earnings yield jumped is that the forward 4-quarter estimate jumped more than the indices, thus the market’s valuation fell a little despite the higher week for stock prices.<\/p>\n Expectation for “forward” SP 500 earnings growth haven’t been this low since late 2015, early 2016.<\/p>\n 2019’s “expected” full-year 2019 earnings growth is now expected at just 2%, the first drop in 16 weeks after staying stable at 3%.<\/p>\n\n