Earnings Update

Earnings season is just about done, so let’s look at where we stand.

Of the 445 companies in the S&P 500 that have reported so far, 332 beat expectations, 73 missed and 40 met.

For Q3, the S&P 500 is on track to report operating earnings of $29.83 per share. That’s an index-adjusted number. That’s an increase of 10.8% over last year’s Q3. (These numbers are from S&P and they sometimes differ from other news sources.) At the start of the year, Wall Street had been expecting $30.89 for Q3. The estimates gradually fell as the year wore on.

Over the last four quarters, the S&P 500 has earned $114.74 per share, so the index is going for 17.8 times that. Wall Street currently expects Q4 earnings to come in at $31.13 per share. That would be an increase of 10.2% over last year’s Q4.

Interestingly, the estimates for Q4 had been fairly stable for much of the year. At the beginning of 2014, Wall Street was expecting $32.17 for Q4. On September 30, the estimate had increased by a tiny bit to $32.24. Only recently have the numbers come down.

If the current Q4 estimate is accurate, then it would bring full-year earnings to $117.62. That would be an increase of 9.6% over last year. Yesterday was the first time that the S&P 500 closed up over 10% for the year. In other words, the S&P 500 has largely kept pace with earnings this year. Valuations haven’t changed.

Posted by on November 11th, 2014 at 11:03 am


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