S&P 500 Earnings: Forward Estimates Get a Nice Bump Up
Brian Gilmartin | Dec 04, 2023 12:37AM ET
Readers will see a nice bump in forward estimates this week, probably at least partially due to Salesforce (NYSE:CRM), Workday (NASDAQ:WDAY), Crowdstrike (CRWD) and Snowflake (NYSE:SNOW). Those 4 companies grew year-over-year (y.y) revenue, 11%, 16.9%, 35.3% and 31.8%.
Salesforce and Crowdstrike both rose 16% and 11.5% respectively.
It was Salesforce that started to breakdown in late, 2021, falling from the $300 area to $125 by December ’22. Crowdstrike as well fell from the $275 area in late ’21 to $100 per share in late ’22, so I look at them as early warning indicators of tech spending sensitivity. Both stocks are still well below that late ’21 high. (No positions in any stock mentioned.)
h2 S&P 500 data: /h2- The forward 4-quarter estimate (FFQE) jumped this week to $236.41 from last week’s $235.82 and 9/30’23’s $232.95.
- The PE on the forward estimate is 19.x vs 19.3 last week, and 18.4 as of 9/30/23.
- The S&P 500 earnings yield is still pretty low at 5.15% vs last week’s 5.17% and 9/30/23’s 5.43%.
- The S&P 500 EPS “upside surprise” is still robust at 7.3%, while the S&P 500 revenue “upside surprise” has slid to +0.9%.
/h2
This “forward EPS estimate curve” tries to show what the FFQE is for forward quarters and then monitor the “rate-of-change” for each bucket.
All the forward estimates increased this past week. It’s interesting that as Q3 ’23 S&P 500 “actual” results have been revised higher, Q4 ’23 S&P 500 estimates growth rates have been revised lower. As this blog detailed last week here , Q4 ’22 was not a good quarter for S&P 500 EPS thus Q4 ’22 earnings actually face an easy comparison versus last year, hence the sharp decline in Q4 ’23 S&P 500 EPS expected growth, which has fallen from roughly 10% to 5% since early October, shouldn’t be a big source of market concern.
2024’s S&P 500 EPS estimate is as of Friday, December 1 ’23, $245.75, versus the 2024 estimate as of 9//30/23 of $247.49, and the June 30th estimate for 2024 of $245.39, which shows remarkable stability.
How well did the forward estimate predict 2023’s full-year EPS ?
- 12/1/23: $220.79
- 9/30/23: $220.83
- 6/30/23: $219.52
- 3/31/23: $220.25
- 12/31/22: $229.24
Get The News You Want
Between the end of 2022 and 3/31/23, Silicon Valley Bank (SIVB) hit, and despite the dire predictions, S&P 500 EPS estimates have been flat ever since, without the calendar year estimate changing at all in the subsequent 9 months of ’23 (at least so far).
For calendar 2024, the current S&P 500 EPS estimate as of 12/1/23 is $245.75, while as of 6/30/23, the same 2024 calendar estimate was $245.39. 2024 S&P 500 EPS is expected to grow 11- 12% next year, versus the S&P 500’s 2% expected growth in 2023.
The S&P 500 EPS estimates remain pretty stable. That’s always a positive. Variance creates uncertainty and uncertainty drives selling.
h2 Conclusion: /h2The companies, particularly the technology companies that reported their October ’23 quarter end results as of last week, still look healthy. We’ll hear from Nike (NYSE:NKE), Fedex (FDX), and Micron (NASDAQ:MU).
Toll Brothers (NYSE:TOL) reports their October quarter this coming week: most investors would likely say that the biggest surprise the last 24 months since interest rate increases became a reality was the outperformance of the homebuilder segment of the S&P 500. Yes, new home supply has been constrained, but still… (Long NKE, FDX.)
From an earnings perspective, what’s left of ’23 and calendar 2024 still looks positive, or at least it’s not a negative (yet).
***
All S&P 500 EPS and revenue data is sourced from IBES data by Refinitiv, unless otherwise noted. All of this is one opinion, and none of this should be construed as advice, or a recommendation. Past performance is no guarantee of future results. Capital markets can change quickly, and this information may not be updated, and if updated, may not be done in a timely fashion. All readers should gauge your own appetite for market volatility and adjust accordingly.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.