Category Archives: earnings

Spring 2022 Snapshot of Expected Future S&P 500 Earnings

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 (Index: SPX) at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings.

Since our last update three months ago, Standard and Poor's projections have strengthened, indicating expectations of stronger growth through 2022 and 2023. The following chart illustrates how the earnings outlook has changed with respect to previous snapshots:

Forecasts for S&P 500 Trailing Twelve Month Earnings per Share, December 2017-December 2023, Snapshot on 12 May 2022

The improved outlook for S&P 500 earnings has developed even though the Federal Reserve has begun raising interest rates and is signaling larger rate hikes to squelch excess inflation generated by the Biden-Harris administration's fiscal policies. Since those policies represent a growing headwind for the U.S. economy, it raises the question of how much more improvement would have been seen had the Fed chosen to continue holding the Federal Funds Rate at the zero bound.

Reference

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 12 May 2022. Accessed 13 May 2022.

150 Years of Historic Yields for the S&P 500

With over 95% of the earnings data for the fourth quarter of 2021 now reported, we thought it might be a good time to visualize the historic yields for the S&P 500 (Index: SPX). The following chart presents the trailing year earnings and dividend yields for the index over the past 150 years, from January 1871 through December 2021.

Historic Yields for the S&P 500, January 1871 through December 2021

For December 2021, we find the earnings yield for the S&P 500 is 4.70%, which places it within the middle of the range it has fallen during the past thirty years. The index' dividend yield however is 1.46%, which comes within a few tenths of a percent from its all-time low recorded at the peak of the Dot-Com Bubble in August 2000.

At this point in 2022, both measures of the relative valuation of the S&P 500 have risen as the value of the index has fallen throughout the year to date.

Winter 2022 Snapshot of Expected Future S&P 500 Earnings

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 (Index: SPX) at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings.

Since our last update three months ago, Standard and Poor modified their projections to indicate slightly stronger earnings growth through 2022 and steady earnings growth through the end of 2023.

Forecasts for S&P 500 Trailing Twelve Month Earnings per Share, December 2017-December 2023, Snapshot on 15 February 2022

2021 was highly unusual for its improving expectations for future earnings at each of our previous snapshots for the year. That improvement was possible because of the recovery from the coronavirus pandemic recession, which was largely dictated by the lifting of lockdown measures imposed by state and local governments. With most of those remaining measures soon to expire, that source of improvement for the business outlook of S&P 500 companies will evaporate in the first half of 2022.

Worse, it is being replaced by an economic environment in which the Federal Reserve will be raising interest rates to quelch excess inflation generated by the Biden-Harris administration's fiscal policies. Which is to say the latest earnings projections indicating steady earnings growth for the S&P 500 may be optimistic because the companies that compose the S&P 500 can expect new headwinds.

Reference

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 15 February 2022. Accessed 18 February 2022.

Fall 2021 Snapshot of Expected Future S&P 500 Earnings

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 (Index: SPX) at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings.

Since our last update three months ago, Standard and Poor has updated their projections to indicate stronger earnings growth going into 2022.

Forecasts for S&P 500 Trailing Twelve Month Earnings per Share, December 2017-December 2022, Snapshot on 11 November 2021

S&P is also forecasting slower earnings growth during 2022.

Reference

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 11 November 2021. Accessed 12 November 2021.

Summer 2021 Snapshot of Expected Future S&P 500 Earnings

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 (Index: SPX) at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings.

The biggest change since our last update three months ago is that Standard and Poor's latest forecast is projecting stronger earnings growth.

Forecasts for S&P 500 Trailing Twelve Month Earnings per Share, December 2017-December 2022, Snapshot on 12 August 2021

The more robust earnings growth can best be seen in the trailing year earnings per share projected for December 2021. Three months ago, S&P anticipated that figure would be $174.87 per share (shown in green), which is now expected to reach $186.09 per share (red).

If that outcome is realized, it would put the S&P 500's trailing twelve month earnings per share ahead of the trajectory that S&P projected back in February 2020 (orange), before the onset of the coronavirus pandemic recession hammered corporate earnings in the U.S.

Reference

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 12 August 2021. Accessed 12 August 2021.