5-Year Rolling Correlation Between S&P 500 TTM EPS YoY vs. China Nominal GDP and U.S. Nominal GDP China’s economic growth slowdown suggests trouble ahead for the S&P 500. Image: BofA US Equity & Quant Strategy
Global EPS Consensus Forecast Global EPS growth estimates for 2022 are falling. Will global stocks follow? Image: BofA Global Investment Strategy
Value vs. Growth – S&P 500 Index Earnings-Per-Share Growth EPS growth helps to explain why value stocks could outperform growth stocks in 2021. Image: Morgan Stanley Weath Management
Inflation – S&P 500 LTM Sales Growth vs. Core CPI Since 1970 Rising inflation tends to boost S&P 500 earnings. According to Goldman Sachs, a 100bp increase in average annual core CPI would lift the S&P 500 EPS to $170 in 2021. Image: Goldman Sachs Global Investment Research
Top 5 vs. S&P 500 ex-Top 5 – YoY Contribution of EPS and P/E to Returns The performance gap could widen further, as the top 5 largest stocks in the S&P 500 are superior on almost every financial metric (revenue, profit growth, margin structure, volatility and corporate leverage). Image: Credit Suisse Research
S&P 500 EPS Forecast Despite the earnings squeeze, Goldman Sachs is still positive on the S&P 500 earnings outlook. In 2020, U.S. and global growth should rebound modestly. Image: Goldman Sachs Global Investment Research
U.S. Buybacks Goldman Sachs expects buybacks to fall by 50% during 2020 compared with 2019 levels, suggesting slower EPS growth and less support for stock prices. Image: Goldman Sachs Global Investment Research
Implied Trailing 12-Month Buybacks Goldman Sachs expects a sharp decline in buybacks in 2020 and 2021, suggesting less support for stock prices and slower EPS growth. Image: Goldman Sachs Global Investment Research
Earnings Estimate Progression This chart shows the earnings estimate progression since 2013. For this year, the consensus estimate of EPS growth is currently around 1.9%, and around 9.7% for 2020. Image: Fidelity Investments