Sunday, May 01, 2011

Strong Earnings Growth Supporting Market Advance

Strong earnings growth so far in the first quarter for companies in the S&P 500 Index is an important factor that explains the strength of the recent advance in the market. As the below chart shows, Q1 earnings expectations for S&P 500 companies has increased significantly.

From The Blog of HORAN Capital Advisors
  • The estimated growth rate for earnings in Q1 for S&P 500 companies is 18%.
  • The forward four quarter P/E ratio for the S&P 500 Index stands at 12.9.
  • Through the end of April, 324 companies have reported earnings, with 84% either exceeding or meeting expectations.
  • Companies are reporting earnings that are 7% above estimates which is greater than the 2% longer term average surprise factor.
Source: Thomson Reuters

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