FTDS - S&P 500 Earnings Yield Nears 5%
2023-07-03 06:30:00 ET
Summary
- The forward 4-quarter estimate this week fell to $224.01 from last week’s $224.33.
- Consumer Discretionary and Communication Services were the big positive change between Q4 ’22 and Q1 ’23 EPS.
- Energy revenue saw a big swing negatively between the two quarters and will likely happen again in Q2 ’23.
Next week, the "forward 4-quarter estimate" will jump to $230.69 (or thereabout), as the range of quarters is changed from the current Q2 '23 to Q1 '24, to Q3 '23 through Q2 '24.
S&P 500 data:
- The forward 4-quarter estimate this week fell to $224.01 from last week's $224.33
- The P/E ratio on the forward estimate is 19.9x vs 18.11x to start the quarter
- The S&P 500 earnings yield is now 5.03%, its lowest level in quite a while. If we use next week's expected forward estimate, the S&P 500 earnings yield jumps to 5.2%
- The "expected" Q1 '23 bottom-up quarterly estimate of $50.71 on 3/31/23, jumped to an actual Q1 '23 bottom-up estimate of $53.09 as of 6/30/23
- Investors will want to see a repeat of the "upside surprise" in Q2 '23 earnings, starting in about 10 days
How did S&P 500 EPS and revenue growth change between Q4 '22 and Q1 '23?
It's not a choice to post a spreadsheet this "busy" but I wanted to show readers the change in S&P 500 EPS and revenue growth between Q4 '22 and Q1 '23.
First of all - despite Silicon Valley Bank and regional bank issues - note the growth in financial sector EPS (top half of table) and then financial sector revenue growth (bottom half of table).
The three rows to the right are the trend in Q4 '22 EPS and revenue, while the three rows to the left are Q1 '23 EPS and revenue.
Consumer Discretionary and Communication Services were the big positive change between Q4 '22 and Q1 '23 EPS, with energy being the bigger negative change.
Energy revenue saw a big swing negatively between the two quarters and will likely happen again in Q2 '23.
Note too how the technology sector was a push, for both EPS and revenue. The numbers really haven't changed despite the YTD return for the tech sector. Red flag? Maybe, or the market's out in front of the fundamentals, which can happen too.
Summary/conclusion : While the data is sourced from IBES data by Refinitiv, the spreadsheets are updated every 4-6 weeks during the earnings season so I can see how the data is trending, rather than just reading it.
It does worry me that the tech sector is up as much as it is YTD, and the numbers are still kind of "meh".
2024 tech sector estimates noted last week here, look like decent growth. The market could be out in front of this too.
With the long weekend, lots more will be written.
Wanted to get this up before too long.
Take all of this as one person's opinion and with healthy skepticism. Past performance is no guarantee or indicator of future results and none of this is advice. Gauge your own appetite or comfort level for market volatility.
Thanks for reading.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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S&P 500 Earnings Yield Nears 5%