Weekly Earnings Update: Q2 2015 Earnings Revisions Not As Negative As Typically Seen

Includes: SPY
by: Brian Gilmartin, CFA

Per Thomson Reuters, the "forward 4-quarter" estimate this week was $122.01, down from last week's $122.12.

The PE ratio on the forward estimate is 17.3(x).

The PEG ratio is (25), or a little less than 2(x) excluding Apple and Energy.

The S&P 500 earnings yield was 5.83%, in line with last week's 5.84%.

The year-over-year growth rate of the forward estimate was -0.68%, unchanged from last week's -0.69%, but negative for 7 consecutive weeks.

Analysis/conclusion: We are in the proverbial dead-zone where S&P 500 earnings are concerned as we await the May '15 quarter-end reports. This week we get FedEx Corp (NYSE:FDX) and Oracle (NYSE:ORCL), which is large-cap tech and the one of the two largest by market-cap of the Transport companies.

John Butters, FactSet's earnings guru, had an interesting line in this weekend's FactSet Earnings Insight: "Analysts have lowered earnings estimates for the S&P 500 for Q2 '15 to date, by a smaller margin relative to recent quarters", which fits with our weekly earnings update last week, that we will likely see stronger earnings as we move into the 2nd and 3rd quarters.

The Energy and US dollar drags, not to mention the US West Coast port slowdown are starting to ebb.

Energy revisions (per FactSet) are actually having a positive influence in expected Q2 '15 earnings, since the expected negative growth rate has improved since March 31, to -61%, from -62.3%. (Energy compares start to get easier with Q3 '15 results.) That -61% is still a sharply negative y/y growth rate, with the point being that revisions are higher, not lower.