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S&P 500 Earnings Update: Green Shoots On Forward S&P 500 Earnings

Brian Gilmartin, CFA profile picture
Brian Gilmartin, CFA


  • The current 2020 S&P 500 EPS estimate is $130.90 for an "expected" y/y decline of -20%.
  • We have been seeing positive revisions grow steadily as a percentage of the total revisions since late March, early April '20.
  • The early signs of sequential improvement of the rate of decline in the forward S&P 500 EPS could be transitory and even evaporate quite quickly so take the optimism with some degree of skepticism.

First, let's take a look at the last five years of annual S&P 500 EPS and the year-over-year (y/y) growth rate:

  • 2019: $162.93 for +1% y/y growth
  • 2018: $161.93 for +23% y/y growth (tax-reform aided)
  • 2017: $132.00 for +12% y/y growth
  • 2016: $118.10 for 1% y/y growth
  • 2015: $117.46 for -1% y/y growth

The current 2020 S&P 500 EPS estimate (as of IBES by Refinitiv's Friday May 1, 2020, This Week in Earnings) is $130.90 for an "expected" y/y decline of -20%.

Some smart prognosticators, and I believe one was Ed Yardeni, thought the 2020 estimate would wind up somewhere between $115 and $135, or a midpoint of $125 and we look to be headed there.

What's remarkable is that the "average" S&P 500 EPS growth rate for the above five years is 7%, the exact average for S&P 500 earnings growth post WW II.

Here is the sequential basis point change in the "forward 4-quarter" S&P 500 EPS estimate:

Note the sequential improvement in the decline of the forward 4-quarter estimate this week, which we can take with a grain of salt since it's the first week of such improvement, but it's there nonetheless.

Readers should like to see that, but it must continue.

Remember this "forward 4-quarter estimate" includes the period from Q2 '20 through Q1 '21.

Here are the expected calendar year S&P 500 EPS estimates for 2020 through 2022 as of this weekend:

  • 2022: $189.63 for expected +13% y/y growth
  • 2021: $168.04 for expected +28% y/y growth
  • 2020: $130.90 for expected-20% y/y growth

The average for S&P 500 earnings growth for the calendar years 2020-2021 continues to be +4% as was shown last week.

S&P 500 EPS estimate revisions have shown improvement

Each week IBES by Refinitiv publishes S&P 500 estimate changes (i.e. revisions) which are tracked

This article was written by

Brian Gilmartin, CFA profile picture
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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