The S&P 500 and Its Earnings

Here’s an update of a chart I run every so often. This is the S&P 500 along with its operating earnings.


There are, however, two changes with this chart. One, this is the first time I’ve had earnings estimates for 2014. Please note that these aren’t my estimates. These are the consensus numbers provided by S&P.

The other change is that I normally scale the two lines at a ratio of 16-to-1. This time, I lowered it to 15-to-1. That’s not a judgment on proper valuation. I simply think it makes the chart look better.

I’m still surprised that Wall Street expects earnings growth to reaccelerate so robustly later this year and into 2014. I certainly hope it happens, but hope isn’t an investment strategy.

The final earnings number for 2012 should be about $96.95. The Street expects $111.22 for 2013 and $125.44 for 2014. Hmmm…not sure about that….

Posted by on February 26th, 2013 at 4:04 pm

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