Earnings Growth May Be Decelerating but Earnings Haven’t Peaked

 
Source: Bloomberg
Past performance is no guarantee of future results.

View from the Observation Deck

  1. Wall Street analysts have been cutting earnings estimates on the S&P 500, but earnings are still growing (see chart). They haven't peaked.
  2. Nearly 70% of companies have beaten their quarterly estimates so far this year.
  3. With 441 of the 500 constituents having reported Q3'11 earnings results as of 11/7, the y-o-y earnings growth rate to date is 16.5%, according to Bloomberg.
  4. The index is on pace to post double-digit earnings growth for the 8th consecutive quarter, according to FactSet.com.
  5. Investors should know that the estimated dollar value of the S&P 500's earnings for Q3 is a record $25.47, according to Bloomberg.
  6. The forward-looking P/E ratio on the S&P 500 is currently just 12.42, according to Bloomberg.
  7. The average P/E for the index over the past 40 years was 16.43, according to Bloomberg.
Posted on Thursday, November 10, 2011 @ 11:50 AM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.