S&P 500 Earnings Growth Hits Three-Quarter Streak of Over 25%, Outpacing Index Performance
The S&P 500 is on track for its third consecutive quarter with earnings growth above 25% in the current fiscal year, according to FactSet. However, despite this strong profit performance, the index has not reached new record highs and remains below mid-August levels. Expected earnings per share have increased by over 8%, while the S&P's price rose only slightly during that period. The forward P/E ratio for the index dropped from 20.4 to around 19.1 since June, making it appear relatively cheaper compared to future earnings expectations. However, when measured against actual past performance, the market still trades at a premium of about 25.5 times trailing earnings. Earnings growth is being driven by strong sales and not just cost-cutting or buybacks. Energy companies are leading with over 100% projected growth due to higher oil prices, while tech firms—especially chipmakers—are also seeing significant gains.
Topics: earnings growth S&P 500 stock market valuation