S&P 500 Index Earnings & Revenue Growth Rates
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View from the Observation Deck  
 
  1. On 7/29/22, the S&P 500 Index closed the trading session at 4,130.29, which was 13.89% below its all-time closing high of 4,796.56 on 1/3/22, 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 1926-2021 (96 years), the S&P 500 Index posted an average annual total return of 10.5%, according to Morningstar/Ibbotson & Associates. 
  4. Earnings estimates were revised markedly lower in July. As indicated in the table, Bloomberg's 2022 and 2023 consensus year-over-year (y-o-y) earnings growth rate estimates for the index were 9.3% and 6.4%, respectively, as of 7/29/22. Those same estimates stood at 10.7% (2022) and 9.3% (2023), respectively, a month ago. Click here to see that post.   
  5. Six of the 11 major sectors that comprise the index reflect a positive double-digit or higher y-o-y earnings growth rate estimate for 2022, compared to four for 2023. 
  6. Bloomberg's 2022 and 2023 consensus y-o-y revenue growth rate estimates for the S&P 500 Index were 11.2% and 4.1%, respectively, as of 7/29/22.
  7. Eight of the 11 major sectors reflect y-o-y revenue growth rate estimates of 5.0% or more for 2022, compared to five for 2023. For comparative purposes, from 2012-2021, that 10-year average was 4.5%, according to S&P.  
  8. The following is a breakdown of the quarterly earnings growth rate estimates for the S&P 500 Index from Q2'22 through Q3'23 as of 7/29/22 (not in table): 6.6% (Q2'22); 6.3% (Q3'22); 7.1% (Q4'22); 7.5% (Q1'23); 6.1% (Q2'23); and 8.3% (Q3'22), according to Bloomberg. 
 
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 an unmanaged index of 500 companies used to measure large-cap U.S. stock market performance. The respective S&P 500 Sector Indices are capitalization-weighted and comprised of S&P 500 constituents representing a specific sector.
 
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Posted on Tuesday, August 2, 2022 @ 11:32 AM

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.