The quarterly bump next week as the calendar rolls into 3rd quarter, 2015, should take the “forward 4-quarter” earnings estimate into the $124 – $125 range.
What was unusual about this 2nd quarter was that the quarterly bump that took the forward estimate to $123.93 on April 2nd, 2015, from the prior weeks $119.96, has seen very minor revisions as this week’s forward 4-quarter estimate is $121.78, so the forward estimate DID NOT see the steep negative revisions over the past 12 weeks that is normally seen.
Factset’s John Butter’s noted this last week when the Factset Earnings Insight said “the percentage decline is much smaller than percentage decline at the same point in time in the previous quarter” i.e. 2.4% decline in Factset’s Q2 ’15 estimate versus the 8.3% decline in Q1 ’15 estimate.
This is somewhat of an apples vs oranges comparison since Thomson and this blog look at the forward 4-quarter estimate while Factset was referring to the 2nd quarter ’15 estimates, but the reader should get the point.
A lot of that is likely due to the Energy sector drag that was already built into the quarter in early April, and the fact that ex-Energy and ex-Apple (NASDAQ:AAPL), Q1 ’15 earnings were pretty strong at +8%, +9% this past quarter.
Here is this week’s data, by the numbers:
- Forward 4-quarter estimate: $121.78 down from last week’s $122.03
- P/E Ratio: 17(x)
- PEG ratio: (22.5) still distorted by growth rate
- S&P 500 earnings yield: 5.79%, up slightly from last week’s 5.78%
- Y/Y growth rate of forward estimate: -0.76%, versus last week’s -0.84% and consistent with the last 9 weeks range
Summary / conclusion: Just like the old Led Zeppelin song, for markets, “The Song Remains the Same” the last 8 weeks. Forward estimates have remained pretty stable while there has been movement within the sectors. The stock market is closed next Friday, July 3rd for the July 4th observance. The June jobs non-farm payroll report gets released next Thursday, July 2nd.
Very few companies report this coming week.
By next Thursday we’ll have the new forward 4-quarter estimate and it should be in the mid $120’s and then shortly thereafter, Q2 ’15 earnings will start to be reported.