Fra Factset Earnings report:
2015 Q1 Earnings Guidance: Negative Guidance (84%) Above Average At this point in time, 62 companies in the index have issued EPS guidance for Q1 2015. Of these 62 companies, 52 have issued negative EPS guidance and 10 have issued positive EPS guidance. Thus, the percentage of companies issuing negative EPS guidance to date for the first quarter is 84% (52 out of 62). This percentage is above the 5-year average of 68%. Earnings and Revenue Declines for First Half of 2015, but Higher Margins Expected For Q1 2015 and Q2 2015, analysts are now predicting year-over-year earnings declines of 3.1% and 0.4%, respectively. On December 31, analysts were projecting growth of 4.2% and 5.3% for these same two quarters. Most of the decline in the expected earnings growth rates for both quarters can be attributed to analysts lowering earnings forecasts for companies in the Energy sector. Analysts are also expecting year-over-year declines in revenue for the first half of 2015 as well. For Q1 2015 and Q2 2015, analysts are currently predicting revenues to fall by 2.3% and 2.6%, respectively. On December 31, analysts were projecting growth of 1.6% and 1.0% for these same two quarters. However, analysts are expecting profit margins to continue to expand in 2015. Using the bottom-up sales-per-share (SPS) and earnings-per-share (EPS) estimates for the S&P 500 as proxies for expected sales and earnings for the index over the next few quarters, profit margin estimates can be calculated by dividing the expected EPS by the expected SPS for each quarter. Using this methodology, the estimated net profit margins for Q1 2015 through Q4 2015 are 10.0%, 10.4%, 10.6%, and 10.7%. These numbers (starting in Q2 2015) are above the net profit margin for Q4 2014 (10.1%), and are also well above the average net profit margin of 9.4% recorded over the past four years. Valuation: Forward P/E Ratio is 16.9, above the 10-Year Average (14.1)
