S&P 500 Index Earnings And Revenue Growth Rate Projections
Supporting Image for Blog Post

 
View from the Observation Deck  
  1. On 8/15/18, the S&P 500 Index closed the trading session at 2,818.37, 1.90% below its all-time high of 2,872.87 set on 1/26/18, according to Bloomberg. 
  2. For the market to trend higher, we believe that corporate earnings will need to grow, and perhaps the best catalyst for growing earnings is to increase revenues.
  3. From 1926-2017 (92 years), the S&P 500 Index posted an average annual total return of 10.2%, according to Ibbotson & Associates/Morningstar. 
  4. As indicated in the table, Bloomberg's 2018 and 2019 consensus year-over-year (y-o-y) earnings growth rate estimates for the index were 23.8% and 11.3%, respectively, as of 8/10/18. 
  5. Nine of the 11 major sectors that comprise the index reflect double-digit y-o-y earnings growth rate estimates for 2018, compared to four for 2019. 
  6. Bloomberg's 2018 and 2019 consensus y-o-y revenue growth rate estimates for the index were 8.3% and 5.1%, respectively, as of 8/10/18.
  7. Eight of the 11 major sectors reflect y-o-y revenue growth rate estimates of 5.0% or more for 2018, compared to four for 2019.
  8. The forecasts for earnings and revenue growth for the S&P 500 Index have been adjusted higher in many cases since our last post on 5/15/18 (click here).

This chart is for illustrative purposes only and not indicative of any actual investment. There can be no assurance that any of the projections cited will occur. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks (currently 505) used to measure large-cap U.S. stock market performance, while the 11 major S&P 500 Sector Indices are capitalization-weighted and comprised of S&P 500 constituents representing a specific sector.

Download a PDF of this post, please click here.
Posted on Thursday, August 16, 2018 @ 2:32 PM

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.