{"id":9687,"date":"2019-12-28T00:11:36","date_gmt":"2019-12-28T00:11:36","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=9687"},"modified":"2019-12-28T00:11:36","modified_gmt":"2019-12-28T00:11:36","slug":"sp-500-earnings-update-sp-500-earnings-yield-at-post-2008-low","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=9687","title":{"rendered":"SP 500 Earnings Update: SP 500 Earnings Yield at Post-2008 Low ?"},"content":{"rendered":"<p>In prepping to write this weekly update, the SP 500&#8217;s &#8220;forward earnings yield&#8221; at 5.28% is as low as I&#8217;ve seen it post 2008. Yes, that&#8217;s a long time. The lowest I&#8217;ve seen it prior to this is the week of January 26th, 2018 when it closed the week at 5.35%. Yes, that week, when vol spiked dramatically and the SP 500 corrected 8% in two weeks.)<\/p>\n<p>However don&#8217;t assume the same thing will happen this time around. Read further.<\/p>\n<p>&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;<\/p>\n<p>Well, next quarter is only one 5 days away, and since the &#8220;forward estimate&#8221; will comprise Q1 &#8217;20 through Q4 &#8217;20, the &#8220;forward estimate&#8221; starting January 1 &#8217;20 will simply be the current calendar 2020 SP 500 EPS estimate and that is &#8211; per IBES by Refinitiv &#8211; $177.27.<\/p>\n<p>Here the current data (which was neglected to be published last week):<\/p>\n<ul>\n<li><em><strong>Fwd 4-qtr est:<\/strong><\/em>\u00a0 $171.15 vs last week&#8217;s $171.71<\/li>\n<li><em><strong>PE ratio: <\/strong><\/em>19x<\/li>\n<li><em><strong>PEG ratio: <\/strong><\/em>14x<\/li>\n<li><em><strong>SP 500 earnings yield: <\/strong><\/em>5.28% vs last week&#8217;s 5.33%<\/li>\n<li><em><strong>Y<\/strong><strong><em>\/Y<\/em> growth of fwd est:<\/strong><\/em>\u00a0+1.30% vs last week&#8217;s +1.26%<\/li>\n<\/ul>\n<p>Trailing data:<\/p>\n<ul>\n<li><em><strong>TTM est:<\/strong><\/em> $163.77 this week vs $163.87 last week<\/li>\n<li><em><strong>PE: <\/strong><\/em>19.8x<\/li>\n<li><em><strong>PEG: <\/strong><\/em>4.20x<\/li>\n<li><em><strong>SP 500 earnings yield: <\/strong><\/em>5.05% this week vs 5.09% last week<\/li>\n<li><em><strong>Fwd est divided by TTM est:<\/strong><\/em>\u00a04.51% vs last week&#8217;s 4.78%<\/li>\n<\/ul>\n<p><em><strong>Summary \/ conclusion:\u00a0 <\/strong><\/em>Next week, when the new forward estimate is plugged in, some of the valuation metrics will look a bit better. For instance if we use the forward estimate of $177.27 divided by the SP 500 (or the &#8220;forward SP 500 earnings yield&#8221;), the forward earnings yield assuming no change in the SP 500 next week, is 5.47% and not the 5.28% noted this week.<\/p>\n<p>The SP 500 earnings yield peaked at 7.02% the week of December 21, 2018.<\/p>\n<p>This week&#8217;s SP 500 earnings yield is pretty low by historical standards.<\/p>\n<p>Readers were told we&#8217;d keep the change in the forward growth rate updated so here is the spreadsheet with this week&#8217;s data:<\/p>\n<figure id=\"attachment_9689\" aria-describedby=\"caption-attachment-9689\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/fundamentalis.com\/?attachment_id=9689\" rel=\"attachment wp-att-9689\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-9689\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/SP5001yearchg122719-300x36.png\" alt=\"\" width=\"300\" height=\"36\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/SP5001yearchg122719-300x36.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/SP5001yearchg122719-768x93.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/SP5001yearchg122719.png 869w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-9689\" class=\"wp-caption-text\">Click to enhance \/ open \/ enlarge<\/figcaption><\/figure>\n<p>&nbsp;<\/p>\n<p>Note how that &#8220;1year chg %&#8221; continues to grow since November 6th, &#8217;19.<\/p>\n<p>In hindsight that was likely the turning point for the &#8221; rate of change in the forward estimate&#8221;.<\/p>\n<p>That SP 500 earnings yield makes me nervous &#8211; that&#8217;s a very low level.<\/p>\n<p>Many think the SP 500 has risen too far, too fast, since early October &#8217;19. The low level of the earning yield supports that notion.<\/p>\n<p>Hope this helps.<\/p>\n<p>Thanks for reading. Out with more this weekend.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In prepping to write this weekly update, the SP 500&#8217;s &#8220;forward earnings yield&#8221; at 5.28% is as low as I&#8217;ve&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":[162,91],"tags":[],"class_list":["post-9687","post","type-post","status-publish","format-standard","hentry","category-sp-500-earnings-yield","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\/9687","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=9687"}],"version-history":[{"count":3,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9687\/revisions"}],"predecessor-version":[{"id":9691,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9687\/revisions\/9691"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9687"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9687"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9687"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}