Ned Davis Research looks at the earnings picture heading into this earnings season (Note this is based upon Q1 earnings):


S&P 500 vs Median Expected Earnings Growth

click for larger chart

Calculation is median 12-month percent change in rolling one-year forecasted EPS. Rolling one-year forecasted EPS is a time-weighted average of current fiscal year’s earnings estimates and following fiscal year’s earnings estimates. Forecasted EPS based on median estimates from Zacks Investment 111 Research.

Reproduced with permission . . .  all rights reserved.

Category: Earnings

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

5 Responses to “S&P 500 vs Median Expected Earnings Growth”

  1. dead hobo says:

    Today, class, we will learn percentages. You should know this is an important concept. Percentages are used in the real world for many important purposes.

    If you have 100 of something and remove 20% of them, you have 80 things remaining.

    If those 80 things increase by 20%, you have 96 things.

    Thus 20% down does not cancel out if you immediately have a 20% gain afterward.

    So, using this concept, if you start at 100%, you end at 96%, which is still 4% below your starting point.

    In other words, the graph above is deceptive, incorrect, and a likely example of government math. But it sure looks fucking impressive.

  2. IS_LM says:

    @ dead hobo: Bemusingly spot on. For extra credit, can we also focus on correlations?

  3. rktbrkr says:

    Another thing class is the dramatic plunge was due in large part to bank unearnings – and the dramatic rebound was due to 1) a fixed game where the banks “earn” big money by borrowing for nothing from the Fed and lend to the treasury for a few % and 2)changes in accounting rules for the TBTF banks so they don’t have to recognize losses due to nasty things like MTM or even recognize mortgage defaults.

  4. Thalamus says:

    Money supply shrink = smaller GDP = smaller earnings. What pipe they smoke to get those calculations?

  5. Will says:

    Dead Hobo,

    Thanks for the math lesson. However, your logic is flawed. On a monthly basis you take the forecasted earnings growth for all S&P 500 stocks. From that pool of 500 percentages (one-year estimated earnings growth) you take the median. That median expected earnings growth is plotted in the bottom of the chart. Each monthly data point is independent from the prior data point. It is meant to measure analysts optimisim/pessimism regarding future earnings growth for your average S&P 500 member. Historically the market underperforms when analysts are this optimistic about one-year earnings.

    If the chart was showing the % change of some sort of index your explanation would be correct.