Tuesday, May 5, 2015

Analysts Continue to Lower S&P 500 Earnings (excerpt)

Although the dollar might have peaked on March 13 for a while, and the price of crude oil might have bottomed on January 13 for a while, industry analysts who cover the S&P 500 are still lowering their earnings estimates for both 2015 and 2016. They now expect $119.02 and $134.18 per share for this year and next year, down 5.9% and 5.2% from their estimates at the end of last year. For this year, they’ve been lowering their Q2-Q4 estimates as earnings have beaten expectations during Q1 with a 4.7% “hook-up” move so far over the past two weeks, which is typical during earnings seasons.

It’s getting harder to find much if any GAARP (growth at a reasonable price) in the US given the latest lofty valuation ranking for the S&P 500 sectors: Energy (28.8 vs. 14.2 year ago), Consumer Staples (19.7, 17.4), Consumer Discretionary (19.0, 17.4), Health Care (17.8, 16.2), Materials (17.2, 16.7), S&P 500 (17.2, 15.3), Utilities (16.4, 16.1), IT (16.2, 14.4), Industrials (16.2, 16.3), Financials (13.9, 13.5), and Telecom Services (13.4, 13.1).

Today's Morning Briefing: The World According to GAARP. (1) John Irving’s terminal cases. (2) Desperately seeking growth at a reasonable price. (3) Is looking for GAARP like waiting for Godot? (4) Global synchronized secular stagnation. (5) Industry analysts aren’t exuberant about outlook for revenues and earnings. (6) Secular stagnation rather than boom or bust. (7) Valuations aren’t cheap, but could go higher in a liquidity-driven melt-up. (8) Hard to find much GAARP in US. (9) Global M-PMIs uninspiring. (More for subscribers.)

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