Sensitivity of S&P 500 Returns to EPS and P/E Scenario Goldman Sachs projects S&P 500 EPS at $253 for 2025, driven by economic slowdowns, tariff pressures, and inflationary risks. Image: Goldman Sachs Global Investment Research
S&P 500 Valuations Based On Forward Operating EPS The sharp market sell-off has triggered a reversion in S&P 500 valuations, which have dropped from 22.5x to 18.5x forward earnings over the past month. With the long-term average near 16x, there may still be scope for further declines. Image: Real Investment Advice
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
Forward EPS YoY % Change vs. S&P 500 Annual Rate of Change Corporate earnings play a key role in shaping market performance. In 2025, the expected U.S. economic slowdown might limit their growth, challenging stock market returns. Image: Real Investment Advice
EPS Revisions Typically, positive revisions in EPS increase stock market value and attract more investors, while negative revisions usually apply downward pressure on stock prices. Image: Goldman Sachs Global Investment Research
U.S. GDP vs. S&P 500 EPS The strong correlation between GDP growth and S&P 500 EPS underscores the importance of cautious investment strategies, particularly given current high market valuations and optimistic earnings forecasts. Image: Real Investment Advice
S&P 500 Quarterly EPS Consensus earnings estimates have been reduced more than usual for first quarters, primarily due to the direct impacts of a stronger dollar and tariffs, rather than a broad economic slowdown. Image: Deutsche Bank Asset Allocation
EPS Growth Estimate Despite a downward revision, consensus 2025 EPS growth estimates still project strong earnings growth. Image: Goldman Sachs Global Investment Research
S&P 500 Aggregate EPS Surprise Corporate America has once again demonstrated its ability to sustain profit margins, with a strong Q4 2024 earnings season surpassing expectations by a significant margin. Image: Morgan Stanley Research
Magnificent Seven and S&P 500 – 12-Month Trailing EPS The Magnificent 7’s future growth is expected to moderate after their exceptional recent performance. While they will remain key market leaders, their rate of expansion is likely to slow down in 2025. Image: Goldman Sachs Global Investment Research
One-Day Move in U.S. Stocks that Beat on 4Q EPS in Excess of S&P 500 The market’s positive response to earnings beats, despite uncertainties surrounding Trump’s policies and the Fed’s direction, suggests that strong corporate performance is outweighing other factors in driving investor sentiment. Image: Bloomberg