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UPDATING S&P 500 EARNINGS FORECASTS

The following comes to us courtesy of Data Diary:

In October, we had a look at Goldman Sachs earnings forecasts for the S&P500 (Giving lemmings a bad name).  Figured it was about time that we had an update:

The changes on 2010 forecasts – allowing for the fact that the numbers don’t add up (rounding errors presumably)?

  • Energy -$3
  • Information technology +$1
  • Health Care +$1
  • Financials Operating EPS -$2
  • Provisions & Writedowns -$1 (ie. less writedowns)

Net the assumed rounding effect, the change in S&P500 EPS ex-P&W was…nothing.

Turning to the 2011 forecasts, the numbers that stand out to me are Energy (+50%), Materials (+50%), and once again Financials (+58%).  Higher commodity prices to drive earnings in the energy and materials sectors (go figure).  And for the Financials?  I thought the 2010 results had the risk revaluation trade to thank (or more correctly, QE) – certainly lending has become a side business as banks hoard cash as seen by the drop in credit and M3.  Wonder then what is going to deliver the 2011 gains?

Source: Data Diary

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