S&P 500 Earnings And Style-Box Update: Big Jump In Forward S&P 500 Estimate

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  • The “forward 4-quarter” estimate this week jumped to $199.34 from last week’s $192.56, which is an increase of $6.78 per share. Readers were given a sneak peek at the potential number last week. The forward estimate on Dec. 31, 2020 was $159 per share.
  • The PE ratio on the forward estimate is now 23x
  • The earnings yield jumped to 4.64%, up from last week’s 4.50%, and Dec. 31, 2020’s 4.23%.
  • The expected increase in SP 500 EPS in 2021 is now 37% versus last year’s actual decline of 14%, and the expectation of +23% EPS growth in 2021 on Dec. 31, 2020.
  • The Q1 ’21 actual bottom-up S&P 500 EPS was $49.13. I actually thought we’d see a number over $50 by June 30, 2021.
  • The Q2 ’21 estimated bottom-up EPS estimate is now $45.07, but I expect that to be over $50 by Sept. 30, 2021.

Q2 ’21 S&P 500 earnings results will be peak y/y growth rates:

Q2-21-Q3-21 EPS Revenue Exponential Growth Rates

The data source is IBES via Refinitiv, but this spreadsheet was a concoction to track forward quarter “expected growth rates” that are buried in the Refinitiv reports.

Look at the peaks in y/y growth for Q2 ’21 S&P 500 revenue and EPS, with the expectation that as we move forward on the calendar, the growth rates slow as pandemic-lockdown is fully lapped towards the end of 2020.

The far right columns reflect expected growth rates for 2022 for S&P 500 revenue and EPS, which revisions will grow in importance after mid-August and September of 2021.

The “expected” revenue and EPS growth rates for the S&P 500 for forward quarters continue to see higher revisions. Understandably, the analysts and the Street in general are a little more cautious about the back half of 2022.

S&P 500 forward S&P 500 earnings curve:

S&P 500 Forward Earnings Curve

Part and parcel to expected forward growth rates, here is the S&P 500 “forward” EPS curve, if we plotted EPS estimates each quarter by dropping off the last quarter and adding the next quarter. Basically, this is a “rolling” forward 4-quarter estimate.

Here’s how 2021 full-year sector growth rates look today:

2021 Full-Year Sector Growth Rates

Source data is IBES data by Refinitiv.

Remember these are “expected” growth rates for full-year 2021.

The is highlighted (not for any particular reason)—that’s a leftover from a post a few weeks ago—but financials remain one of clients’ largest sector overweight’s—between 10% and 20%—for any number of reasons, not the least of which will be the higher dividends and more share repurchases as loan loss reserves are reversed the next few quarters and more capital is returned to shareholders.

Financials expected revenue growth for Q2 ’21 is -5.5%, while EPS growth for the sector is expected at +100% y/y growth.

The S&P 500 kickoff the week of July 12, 2021, is when the financials start their Q2 ’21 financial results.

Style-box Update

Style-Box Update

Here’s the style-box update I publish every 6 weeks, which gives readers some idea of how value vs growth and large-cap vs small-cap are performing and maybe more importantly, how the styles and asset-classes are changing.

Note the improvement in growth—particularly large-cap growth—vs value since May 15.

Because of the “correlation is not always causality” dictum, large-cap growth performance improved the last 6 weeks of the quarter, possibly due to the benign action in interest rates. From roughly May 15 to June 30, the improved from 1.64% to 1.43%, and the inflation worries seemed to have come off the table as hot never resulted in a sell-off or decline in the Treasury complex.

The Treasury market is really telling us there is little worry over inflation.

This coming week, we’ll have posts on how Tech estimates are holding up and how Q2 ’21 S&P 500 EPS and revenue growth expectations look prior to actual results starting July 12, 2021.


Readers should know—as of late June, early July—the longer-term pattern pf week-to-week higher revisions for expected growth for S&P 500 EPS and revenue, still has not changed, i.e., week-to-week we continue to see higher revisions, which is always a positive.

What’s surprised me too during the last few weeks, when revisions typically slow and actually usually show weakness week-to-week, the upward revisions have continued.

Q2 ’21 S&P 500 EPS and revenue growth could be monstrous, with 65% y/y EPS growth expected, and then the surprise factor for Q1 ’21 S&P 500 coming at 22.3%. If the “surprise” factor Q2 ’21 EPS is anywhere near Q1’s 22.3%, the y/y growth for Q2 ’21 S&P 500 EPS could come in around 90% y/y.

But here’s the key: don’t watch the results, watch the stock price reaction to the results. Your first tell for a badly-needed correction will be stocks selling off in the face of very strong earnings results.

Take everything you read with substantial skepticism, and a healthy grain of salt. Gauge your investment strategy based on your financial profile and your own ability to be comfortable with volatility.