Altogether, about 8% of S&P 500 companies have reported Q4 earnings so far. The beat rate is currently 81%, which is well above average. It hasn’t been this high since Q3 2023.Earnings have come in 10.6% above expectations, which is also well above average. It similarly hasn’t been this high since Q3 2021. The total earnings growth for Q4 so far is +10.7%, on sales growth of +4.1%.
The forward EPS (estimated earnings over the next 12 months, as shown by the blue line) has jumped to a record $273.18 as we rolled into the next quarter/year. Meanwhile, the trailing EPS (reported earnings over the last 12 months, as shown by the red line) is also at a record $242.46.The expected earnings growth rate is now +12.7%, while the reported growth rate is +10.2%.
The forward price-to-earnings ratio based on Friday’s close is now 22x, which is still about 30% above the historical average for both trailing and forward EPS.
The risk premium over bonds seems to suggest that stocks haven’t been this expensive in about 20 years.This has been a solid start to Q4 so far, but we still have a long way to go. The majority of the S&P 500 group will report earnings in the next two to three weeks, so we’ll get a much better picture then. Based on recent valuations, it seems that a lot of good news has already been priced in.More By This Author:Retail Sales Miss Expectations, While Inflation Adjusted Sales Remain Stagnant Financials Get Q4 Earnings Off To A Good Start U.S. Dollar And Rates Pullback After Core Inflation Beats Expectations
