S&P 500 Earnings Revisions Continue To Bode Well For Future Returns

2021 S&P 500 EPS Still Above 2019

Here’s a quick rundown of the weekly stats:

  • ’s “Forward 4-quarter estimate” ended this week at $128.34 vs $128.45
  • Remember on July 1 the forward estimate will “roll” from the period covering Q2 ’20 to Q1 ’21, to Q3 ’20 – Q2’21. (See the forward estimate below for that bucket’s “forward 4-qtr estimate”, which is currently $143.20.)
  • For the 9th straight week, the “average” expected S&P 500 earnings growth for both 2020 and 2021 is 4%. That hasn’t changed since mid-April ’20.
  • What the simple average tells me is that the relationship between the 2020 and 2021 S&P 500 estimates has not changed.
  • The expected 2020 S&P 500 EPS is still hovering around $125, which has been stable for 5 weeks.
  • The expected 2021 S&P 500 EPS of $163.99 is still above the 2019 final EPS print of $162.93. I think that’s important – no one else really does, though.
  •   The “rate of change” continues to improve for S&P 500 earnings. Here’s a look at the S&P 500 “forward earnings curve”.

Summary / Conclusion:

The S&P 500 rise 1.8% this week and corporate bond returns improved this week, both of which are positive for capital markets. The S&P 500 earnings revisions continue to bode well for “expected, future returns” for the S&P 500, but that isn’t a prediction, simply an observation.

The S&P 500 earnings yield continues to sit at depressed levels at 4.14%, but if we plugged in next quarter’s “forward 4-quarter estimate” of $143.20, the S&P 500 earnings yield jumps to 4.6% versus the 4.1% today.

Nike (NYSE:) and Accenture (NYSE:) report this week, and then FedEx (NYSE:) and Micron Technology (NASDAQ:) next week. Nike will give is a look into China.

All of this can change very quickly, and it’s one opinion, so invest according to your own financial profile.

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Brian Gilmartin

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