Here is the data:
Estimated 2018 S&P 500 EPS growth, with accompanying P.E
- 1/26/2018: +16%, 18.7x
- 1/19/2018: +15%, 18.5x
- 1/12/2018: +14%, 18.5x
- 1/5/2018: +12%, 18.5x
- 12/29/2017: +12%, 18.7x
In Friday’s post (here) we showed the same numbers, but with tonight’s data I wanted readers to clearly see two metrics:
1.) 2018 estimated EPS growth for the S&P 500 has accelerated from 12% to 16% in just 4 weeks, pretty extraordinary given that the usual revision pattern is downward pressure on the forward estimate;
2.) The P.E ratio on the S&P 500 as of Friday, January 26th, 2018, is exactly the same as on 12/29/17.
There has been no “P.E expansion” at all with this rally.
At some point we’ll see a correction. There has been a new stock market record set recently with the longest streak without a 5% correction in history, per many technicians who track this kind of data, like Ryan Detrich of LPL Financial.
The S&P 500 continues to simply “walk up” estimated earnings growth for 2018.