Earnings in Focus


Approximately 2,300 publicly traded companies will report earnings this week. As such, it is a big week for earnings and by the end of it, we should have a good read on the overall tenor of earnings for the quarter ended September 30th. This is a pivotal quarter because the aggregated analyst estimates for all S&P 500 companies are calling for a return to growth in earnings after three consecutive declining quarters.

The chart below from Yardeni Research shows expected aggregate earnings for the current year (in blue) of $216.74 for the S&P 500 Index overall (combined size weighted earnings for the entire index). If this is correct, the S&P is trading at about 20 times trailing earnings. For 2024, the consensus expectation is for earnings to come in at $241.35. This implies a forward P/E multiple of 17.5. This becomes a great benchmark against which to compare actual earnings results as they come in over the next few weeks. If these earnings levels do, in fact, manifest for 2024, then a year from now a trailing PE of 20 would put the S&P at 4800 one year from today.



This, then, is the primary reason this specific earnings season is pivotal: if we get the earnings growth expected by analysts and it continues as expected into 2024, then there are 10-12% in potential equity returns to be had. Conversely, if those expected earnings fail to materialize, then we could be looking at delayed gratification when it comes to earnings and stock market returns. We will check in on the earnings reports for the third quarter sometime in late November. As always, we thank you for your business and the trust you place in us to manage your wealth.



The S&P 500 Index, or Standard & Poor’s 500 Index, is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. The S&P 500 index is regarded as one of the best gauges of prominent American equities’ performance, and by extension, that of the stock market overall.

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