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
S&P 500 Earnings Estimates Reflecting optimism about corporate growth, Morgan Stanley forecasts S&P 500 EPS to reach $269 in 2025 and $297 in 2026. Image: Morgan Stanley Wealth Management
S&P 500 and Forward Earnings Estimates There is considerable hope for strong earnings growth over the next 12 months, but the realization of these expectations remains uncertain and influenced by multiple factors. Image: Real Investment Advice
MSCI World Fwd PE and EPS Revisions Downward revisions in global EPS raise concerns, suggesting that the global economic landscape is precarious, prompting central banks to adopt more aggressive strategies to stimulate growth. Image: J.P. Morgan