U.S. ISM Manufacturing Index vs. S&P 500 EPS Annual % Change With the ISM Manufacturing Index and S&P 500 earnings growth moving hand in hand, either ISM climbs into the high 50s as the cycle heats up, or earnings estimates reset lower. At this point in the cycle, the revisions tend to come first. Image:…
Revision to Consensus S&P 500 EPS Have consensus earnings estimates for 2021 the potential to rise again? Image: BofA US Equity & Quant Strategy
S&P 500 Annual Rate of Change vs. Annual Change in GAAP Earnings The S&P 500 tends to track corporate earnings, so strategies built on profit growth make sense for investors playing the long game. In the end, it’s earnings that lift stocks and sustainable growth beats short-term noise every time. Image: Real Investment Advice
S&P 500 Valuations Based On Forward Operating EPS Easy money and low rates could keep pushing S&P 500 multiples higher, but the risk is that earnings won’t rise fast enough to support them. For the moment, liquidity is driving markets far more than fundamentals. Image: Real Investment Advice
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