How Have 2019 S&P 500 Earnings Growth Estimates Changed?

Nov. 10, 2018 2:59 AM ETSPY, VOO, IVE, SH, SDS, IVV, SSO, SPXU, UPRO, SPXL, RSP, SPXS, VFINX, SPYG, IVW, VOOG, RPG, RPV, SPYV, EPS, VOOV, BXUB, SPLX, FTA, SPUU, BXUC, SFLA-OLD, SPDN, SPXE, SPXT, DHVW, CAPX, PPLC, SPVU, SPXV, RYARX, SPXN, DMRL, RVRS, USMC4 Comments
Brian Gilmartin, CFA profile picture
Brian Gilmartin, CFA
9.32K Followers

Walmart (WMT) officially ends the Q3 '18 earnings season this week, with its report Thursday morning.

Looking ahead to next year and to answer the headline question directly, "Not Much" is probably the best answer.

Let's look at the data (Source: IBES by Refinitiv).

With the exception of the sharp drop in Q3 '19 earnings growth expectations, 2019 S&P 500 growth estimates have remained relatively stable the last 3-4 months.

A run through the weekly numbers:

  • Fwd 4-qtr est: $172.17
  • PE ratio: 16x
  • PEG ratio: 0.77x
  • S&P 500 earnings yield: 6.19%
  • Y/y growth of fwd est: +20.9% vs. last week's 21.7%

Summary/conclusion: The 2% rally in the S&P 500 this week brought the key benchmark back above its 200-day moving average, as the S&P 500 and the major equity indices continue to recover from the October '18 drawdown. Walmart, Cisco (CSCO), and a couple of semiconductor companies like Nvidia (NVDA) and Applied Materials (AMAT) report this week. The Semiconductor sector has gotten pounded since it peaked in Q1 '18. The sector is extremely difficult to trade, and my experience with the sector is that it takes 12-18 months for the sector to bottom after it starts to correct, although that depends on the stock and the company.

The semiconductor sector is approaching oversold territory on the weekly chart.

2019 S&P 500 earnings growth estimates - so far anyway - have shown little change from earlier blog posts here, which addresses Technology specifically, and here which shows the 2019 estimate still at $177.25 (the 2019 estimate is $177.25) versus a higher 2018 estimate.

2019 S&P 500 earnings have slowed, but because the 2018 estimate has risen, not that 2019 has declined.

More to come this weekend.

Thanks for reading.

This article was written by

Brian Gilmartin, CFA profile picture
9.32K Followers
Brian Gilmartin, is a portfolio manager at Trinity Asset Management, a firm he founded in May, 1995, catering to individual investors and institutions that werent getting the attention and service deserved, from larger firms. Brian started in the business as a fixed-income / credit analyst, with a Chicago broker-dealer, and then worked at Stein Roe & Farnham in Chicago, from 1992 - 1995, before striking out on his own and managing equity and balanced accounts for clients. Brian has a BSBA (Finance) from Xavier University, Cincinnati, Ohio, (1982) and an MBA (Finance) from Loyola University, Chicago, January, 1985. The CFA was awarded in 1994. Brian has been fortunate enough to write for the TheStreet.com from 2000 to 2012, and then the WallStreet AllStars from August 2011, to Spring, 2012. Brian also wrote for Minyanville.com, and has been quoted in numerous publications including the Wall Street Journal.

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