A reader asked about sector P/Es a few weeks ago - haven't updated the above spreadsheet in a few years:
- Financials - big jump in earnings growth rate, but i do think a lot of that is Berkshire's (BRK.A, BRK.B) gain. Berkshire is now the fifth-largest holding in the S&P 500 by market cap.
- Energy still shocks me - the growth rate has been through the roof the last two years, and the sector has gone nowhere, no doubt due to Exxon's (NYSE:XOM) and Chevron's (NYSE:CVX) percentage of the sector.
- Technology should be fine in Q1 '18, but a lot of the big cash repatriation should already be in the numbers.
Don't ignore the sector as a percentage of the S&P 500's market cap either: remember, Technology, Financials, Health Care and Consumer Discretionary (which is really being powered by Amazon and Netflix) make up 67% of the entire index's market cap. Tech, Financials and Health Care are 54%.
When earnings start, focus on the companies that are executing - the big buyback programs don't seem to be driving stock prices unless revenue and execution are present.
Out this week with more on this.
Thanks for reading.