Valuation – Shiller Cyclically Adjusted Price/Earnings Ratio Higher inflation and lower corporate profitability structurally undermine the sustainability of U.S. equity valuations. Image: Goldman Sachs Global Investment Research
Earnings Growth Goldman Sachs predicts a narrowing gap in earnings growth between the Magnificent Seven and the rest of the S&P 500, with the former’s outsized contribution to index earnings expected to diminish. Image: Goldman Sachs Global Investment Research
Earnings – Peak to Trough Decline in LTM S&P 500 EPS During Recessions Historically, recessions since World War II have caused a median 13% decline in S&P 500 EPS, often leading to substantial index losses. Image: Goldman Sachs Global Investment Research
S&P 500 Profit Margin – Operating Earnings/Sales S&P 500’s profit margins for 2025 face significant risks from tariffs and rising import costs, which could undermine the current optimistic consensus forecasts. Image: J.P. Morgan Asset Management
Earnings Sentiment (Analyst Upgrades Minus Downgrades Across Markets) Earnings sentiment in the S&P 500 remains negative but has shown slight improvement recently. Image: Goldman Sachs Global Investment Research
S&P 500 Forward Earnings Estimates Wall Street’s optimistic earnings projections have sparked debate about their alignment with economic realities. While many analysts remain bullish, there are growing concerns about the sustainability of these projections. Image: Real Investment Advice
Deviation of Earnings Above/Below Long Term Growth Trend The widening gap between current earnings forecasts and historical growth patterns is raising concerns among some investors about the sustainability of these optimistic projections. Image: Real Investment Advice
Cumulative Change in Consensus Earnings Estimates Even with a projected slowdown in earnings growth for the Magnificent 7 in 2025, analysts remain optimistic about their continued market leadership. Image: Goldman Sachs Global Investment Research
EPS – Earnings-Per-Share Growth Forecast The EPS growth forecasts for all regions are 26% to 30% for 2021, and double-digit growth is expected in 2022. Image: Morgan Stanley Research
Proportion of S&P 500 Beating Earnings Estimate The proportion of U.S. companies exceeding earnings estimates increased in Q4 2024, remaining well above the historical average. This reflects ongoing positive trends in corporate earnings. Image: Deutsche Bank Asset Allocation
S&P 500 Earnings Estimates Morgan Stanley forecasts S&P 500 earnings per share to hit $271 in 2025 and $303 in 2026, indicating a bullish market outlook. Image: Morgan Stanley Wealth Management