Inflation – S&P 500 LTM Sales Growth vs. Core CPI Since 1970 Rising inflation tends to boost S&P 500 earnings. According to Goldman Sachs, a 100bp increase in average annual core CPI would lift the S&P 500 EPS to $170 in 2021. Image: Goldman Sachs Global Investment Research
S&P 500 Trailing 4-Quarter EPS Goldman Sachs expects S&P 500 earnings to contract by 21% in 2020, before rebounding by 30% next year and 11% in 2022. Image: Goldman Sachs Global Investment Research
Annual S&P 500 EPS Growth Through 2022 Goldman Sachs expects S&P 500 earnings to contract by 21% this year, before rebounding by 30% in 2021 and 11% in 2022. Image: Goldman Sachs Global Investment Research
S&P 500 Price Return vs. 2021 EPS Revisions This chart highlights the positive correlation between price return and 2021 earnings revisions. Image: Goldman Sachs Global Investment Research
S&P 500 Year/Year EPS Growth Goldman Sachs maintains the 2020 S&P 500 EPS estimate of $110 and adjusts the quarterly path of earnings growth. Image: Goldman Sachs Global Investment Research
S&P 500 Index and Total Return to Gold Ratio According to BofA, the gold to equity ratio is elevated given the earnings uncertainty, but it is far from historical highs. Image: BofA Global Research
S&P 500 Current P/E Valuation Based on 2021 EPS Scenarios Goldman Sachs baseline forecast for S&P 500 earnings in 2021 is $170, and the downside forecast is $115. Today, the S&P 500 trades at 19.5x the buy-side estimate of EPS. Image: Goldman Sachs Global Investment Research
Valuation – GS Top-Down vs. Consensus Bottom-Up Estimates of 2020 EPS Growth This chart suggests that equity market valuations are too high, as current stock prices do not reflect the scale of earnings declines in a recession. Image: Goldman Sachs Global Investment Research
Annual S&P 500 EPS Growth Goldman Sachs expects no earnings growth this year. Image: Goldman Sachs Global Investment Research
Median S&P 500 EPS Growth The median S&P 500 stock is expected to grow earnings per share by 8% this year. Image: Goldman Sachs Global Investment Research
U.S. Corporate Profits and 10Y-3M Yield Curve While the divergence between large-cap profits and the rest of the economy is the widest on record, the steepening yield curve suggests an earnings rebound. Image: BofA Global Research