S&P 500 Earnings Yield Jumps To 6.37%

Published Sat, 14 Mar 2020 09:30:06 -0400 on Seeking Alpha

Even with the late-day surge on Friday, the S&P 500 ended the day with an "earnings yield" of 6.37%.
Even though the consumer is strong and the February '20 employment report was very strong, how do you/we trust anything in terms evaluating changes in consumption patterns and business work practices.
Q1 '20 S&P 500 earnings growth has been revised down to expectations of 1% and for Q2 '20 +3.5% growth. Those will likely go lower too.
Even with the late-day surge on Friday, the S&P 500 ended the day with an "earnings yield" of 6.37%, not nearly as attractive though as the yield from Thursday night, March 12th, which (using the forward 4-quarter estimate of $172.71) printed 6.96%, just 3/100ths away from the December 2018 high earnings yield of 7%.
Maybe Thursday night, March 12th, was the bottom.
S&P 500 Earnings data: (Source for forward estimate is IBES by Refinitiv):
Fwd 4-qtr est: $172.71 vs. last week's $174.30 Rate of change: +2.94% vs. last week's 3.86% PE ratio: 15.7x vs. last week's 17x S&P 500 earnings yield: 6.37% vs. 5.86% from last week, a pretty steep jump Summary/conclusion: Reading some of the headlines from the conference call on Oracle's (NYSE: ORCL) fiscal Q3 '20 which ended Feb '20 last night, the database-cum-cloud giant guided to slightly better EPS growth for its traditionally strongest fiscal Q4 ended May '20. Oracle is doing a little better transitioning from on-premise organic licenses to cloud applications, but the decline in that legacy on-premise business is still a drag on the entire business. The stock was up 8% on just over 2x average volume. Our earnings preview on Oracle was here, and there was one aspect to the headlines that caught my eye. It requires a longer article.
At this point, I think Q1 '20 S&P 500 earnings are a real crap-shoot: even though the consumer is strong and the February '20 employment report was very strong, how do you/we trust anything in terms... Read more