Category Archives: Earnings

The S&P 500 Is Still Valued Below The Average Forward P/E Of The Last 30 Years

JP Morgan Funds Twitter account posted a nice graph on Twitter today showing that, even while the S&P is trading near an all time high, this rally could go a lot further. The S&P 500 is still trading below the average forward P/E of the last 30 years according to the graph. According to this chart the S&P 500 is fairly valued and we are not experiencing some kind of bubble. Of course earnings will need to keep growing in the future to keep justifying a higher price.

JP morgan S&P 500 forward price equity graph chart 20 years showing fair value

On Average Most Companies Beat Earnings And Revenue Estimates

Earnings for Q1 2013 are coming this month. Should you be surprised when a company beats its earnings estimates? No says Bespoke Investment Group. They posted an article a while ago showing that most companies beat the earnings and revenue estimates made by analysts.

Earnings:

average earnings beat quarter estimates

And Revenues:

average revenues estimates beat quarter

As most stocks have a short ‘pop’ after an earnings and revenue beat you could of course use this information to make a little speculative bet by going long a few stocks on the day that they will be reporting earnings.

Although, of course, results from the past provide no guarantee for the future.