95% of the S&P 500 has now reported earnings results for the second quarter of 2014. On the whole the results were quite strong. Below is a table of what several earnings measurements look like now versus when we started the year.
Trailing-12-month “As reported” earnings have grown by 3.1% from their level on January 1, which implies that earnings would grow by a little over 6% for 2014 if they maintain their current trajectory. Earnings have grown faster than revenues thanks to continued margin expansion.
The forward earnings estimate has grown the most of any earnings measure, which means that analysts expect earnings to grow faster in the next 12 months than they expected them to grow at the beginning of 2014. Analysts expect operating earnings to grow by 14.3% between now and 2Q15 and expected them to grow by 11.7% in 2014 at the beginning of this year.
The S&P 500 is up 6.6% for the year now, which means that multiples have expanded based on every metric except for forward earnings estimates. In other words, the year-to-date performance of the S&P 500 has tracked growth of forward estimates well, but has outpaced realized earnings growth.
Source: Standard and Poors
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