Predicting the Markets:Chapter 13 Charts:
Predicting Corporate EarningsYardeni Research, Inc.
February 11, 2019
Dr. Edward YardeniChief Investment Strategist
Mali QuintanaSenior Economist
Please visit our sites atwww.yardeni.comblog.yardeni.com
thinking outside the box
Table Of Contents Table Of ContentsTable Of Contents
February 11, 2019 / Chapter 13 Charts: Predicting Corporate Earnings www.yardeni.com
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Predicting Corporate Earnings 1-24
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 2230
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Jan
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01 0203
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0809
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12
S&P 500 OPERATING EARNINGS PER SHARE (Thomson Reuters data)(consensus analysts’ estimates in dollars, monthly, ratio scale)
Analysts’ EstimatesAnnual*12-month forward**
* "Squiggles" span 25 months from February to February.** Time-weighted average of consensus operating earnings estimates for current year and next year.
*** Actual 4Q sum from Thomson Reuters I/B/E/S.Source: Thomson Reuters I/B/E/S.
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95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 2230
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Actual 4Q sum***
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Figure 1.
1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 199510
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S&P 500 OPERATING EARNINGS PER SHARE (Thomson Reuters data)(consensus analysts’ estimates in dollars, monthly, ratio scale)
Analysts’ EstimatesAnnual*12-month forward**Actual 4Q sum***
* "Squiggles" span 25 months from February to February.** Time-weighted average of consensus operating earnings estimates for current year and next year.
*** Actual 4Q sum from S&P until Q4-1993 then Thomson Reuters I/B/E/S thereafter.Source: Thomson Reuters I/B/E/S.
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Figure 2.
Predicting Corporate Earnings
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202050
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Q3
09
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1516 17
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2/7
S&P 500 OPERATING EARNINGS PER SHARE (Thomson Reuters data)(consensus analysts’ estimates in dollars, weekly, ratio scale)
Analysts’ EstimatesAnnual*52-week forward**Actual 4Q sum***
* "Squiggles" span 25 months from February to February.** Time-weighted average of consensus operating earnings estimates for current year and next year.
*** Actual 4Q sum from Thomson Reuters I/B/E/S.Source: Thomson Reuters I/B/E/S.
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Figure 3.
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 200840
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04
05
06
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S&P 500 OPERATING EARNINGS PER SHARE (Thomson Reuters data)(consensus analysts’ estimates in dollars, weekly, ratio scale)
Analysts’ EstimatesAnnual*52-week forward**Actual 4Q sum***
* "Squiggles" span 25 months from February to February.** Time-weighted average of consensus operating earnings estimates for current year and next year.
*** Actual 4Q sum from Thomson Reuters I/B/E/S.Source: Thomson Reuters I/B/E/S.
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Figure 4.
Predicting Corporate Earnings
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80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18-60
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2.4
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3
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0
S&P 500 CONSENSUS ANNUAL EARNINGS FORECASTS: 1980-2016* (Thomson Reuters data)(25-month percent change)
Source: Thomson Reuters I/B/E/S.* Percent change in consensus annual forecast from initial forecast to actual, e.g., from February 1979 to February 1981 for calendar year 1980.
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Figure 5.
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20-50
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S&P 500 NET EARNINGS REVISIONS*(percent, three-month basis)
Jan
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* Three-month moving average of the number of forward earnings estimates up less number of estimates down, expressed as a percentageof the total number of forward earnings estimates.Note: Shaded areas denote recessions according to the National Bureau of Economic Research.Source: Thomson Reuters I/B/E/S.
Figure 6.
Predicting Corporate Earnings
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86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 2010
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Q3
2/7
S&P 500 OPERATING EARNINGS PER SHARE: FORWARD & ACTUAL (Thomson Reuters data)(dollars per share)
Earnings Per Share
Operating** (4Q sum)Forward*
* Time-weighted average of consensus estimates for current year and next year. Monthly through March 1994, then weekly.** Actual 4Q sum from S&P until Q4-1993, then from Thomson Reuters I/B/E/S.
Source: Thomson Reuters I/B/E/S.
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Figure 7.
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 2210
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Q3
2/6
S&P 500 OPERATING EARNINGS PER SHARE: FORWARD & ACTUAL (Thomson Reuters data)(dollars per share)
Earnings Per Share
Operating Earnings**(4Q sum)
Forward Earnings*(pushed 52-weeks ahead)
* Time-weighted average of consensus estimates for current year and next year. Monthly through March 1994, then weekly.** Actual 4Q sum from S&P until Q4-1993, then from Thomson Reuters I/B/E/S.
Source: Thomson Reuters I/B/E/S.
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Figure 8.
Predicting Corporate Earnings
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79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 220
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Jan
S&P 500, FORWARD EARNINGS, and VALUATION(monthly)
S&P 500S&P 500 Blue AngelsImplied Price Index*
* Implied price index calculated using forward earnings times forward P/Es.Source: Standard & Poor’s and Thomson Reuters I/B/E/S.
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Figure 9.
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020600
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x19S&P 500, FORWARD EARNINGS, and VALUATION(weekly)
S&P 50002/11/19
S&P 500 Blue AngelsImplied Price Index*02/07/19
* Implied price index calculated using forward earnings times forward P/Es.Source: Standard & Poor’s and Thomson Reuters I/B/E/S.
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Figure 10.
Predicting Corporate Earnings
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35 40 45 50 55 60 65 70 75 80 85 90 95 00 05 10 15 20 25.05
12.05
24.05
36.0548.05
.05
12.05
24.05
36.0548.05
S&P 500 REPORTED EARNINGS PER SHARE*(dollars, quarterly, ratio scale)
Q3
* Q4-2008 not shown because of large negative value.Note: Shaded areas denote recessions according to the National Bureau of Economic Research.Source: Standard & Poor’s.
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Figure 11.
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20-25
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Q3
Q3S&P 500 OPERATING & REPORTED EARNINGS PER SHARE (S&P data)(dollars, quarterly)
S&P 500 EarningsOperating (S&P data)Reported (S&P data)
Source: Standard & Poor’s.
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Figure 12.
Predicting Corporate Earnings
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93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20-5
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S&P 500 OPERATING EARNINGS PER SHARE(dollars, quarterly)
S&P 500 Operating EarningsThomson Reuters dataS&P data
Source: Standard & Poor’s and Thomson Reuters I/B/E/S.
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Figure 13.
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 200
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Q3
Q3
S&P 500 NET WRITE-OFFS PER SHARE(dollars, 4-quarter sum)
S&P 500 Net Write-OffsS&P Data*Thomson Reuters Data**
* S&P operating less S&P reported earnings per share.** Thomson operating less S&P reported earnings per share.
Source: Standard & Poor’s (reported earnings) and Thomson Reuters I/B/E/S (operating earnings).
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Figure 14.
Predicting Corporate Earnings
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70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22-250
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Q3
INVENTORY VALUATION ADJUSTMENT*(billion dollars, saar)
CAPITAL CONSUMPTION ADJUSTMENT*
* These two adjustments restate the historical cost basis used in profits tax accounting for inventory withdrawals and depreciation to the current costmeasures used in GDP.Source: Bureau of Economic Analysis.
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Figure 15.
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22-1000
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Q3
Q3
Q3AFTER-TAX CORPORATE PROFITS: NIPA vs S&P 500(billion dollars, quarterly)
NIPA Profits (saar)Based on Tax Returns*From Current Production**
S&P 500 Net Income(annualized, nsa)
Operating (S&P data)Reported (S&P data)
* Excluding Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCadj).** Including IVA & CCadj. These two adjustments restate the historical cost basis used in profits tax accounting for inventory withdrawals and
depreciation to the current cost measures used in GDP.Source: Bureau of Economic Analysis and Standard & Poor’s.
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Figure 16.
Predicting Corporate Earnings
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70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 2240
440
840
1240
1640
20402440
40
440
840
1240
1640
20402440
Q3
Q3AFTER-TAX CORPORATE PROFITS: NIPA FROM CURRENT PRODUCTION vs S&P 500(billion dollars, quarterly, ratio scale)
After-Tax Adjusted ProfitsFrom Current Production (NIPA data)*S&P 500 OperatingNet Income (S&P data)**
* Annualized and seasonally adjusted. Including Inventory Valuation Adjustment and Capital Consumption Adjustment. These two adjustments restatethe historical cost basis used in profits tax accounting for inventory withdrawals and depreciation to the current cost measures used in GDP.
** Annualized and not seasonally adjusted. Q4-2008 not shown because of large negative value.Source: Bureau of Economic Analysis and Standard & Poor’s.
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Figure 17.
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 2220
420
820
1220
1620
20202420
20
420
820
1220
1620
20202420
Q3
Q3AFTER-TAX CORPORATE PROFITS: NIPA BOOK vs S&P 500(billion dollars, quarterly, ratio scale)
After-Tax Reported ProfitsBook Profits (NIPA data)*S&P 500 ReportedNet Income (S&P GAAP data)**
* Annualized and seasonally adjusted. Excluding Inventory Valuation Adjustment and Capital Consumption Adjustment.** Annualized and not seasonally adjusted. Q4-2008 not shown because of large negative value.
Source: Bureau of Economic Analysis and Standard & Poor’s.
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Figure 18.
Predicting Corporate Earnings
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64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 2205101520253035404550556065707580859095100105110115
05
101520253035404550556065707580859095
100105110115
Q3
S&P 500 AGGREGATE REPORTED NET INCOME (GAAP basis)(four-quarter sum as a percent of four-quarter sum of NIPA after-tax book profits*)
Capped inQ4-2008
* Profits reported on tax returns.Source: Bureau of Economic Analysis and Standard & Poor’s.
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Figure 19.
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22450
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1/31Q3
S&P 500 REVENUES PER SHARE: ACTUAL (S&P quarterly data) & FORWARD (TR weekly data)(dollars)
Revenues Per ShareForward*Actual (quarterly, annualized, nsa)
* Time-weighted average of consensus estimates for current and next year. Monthly through December 2005, then weekly.Source: Standard & Poor’s (for actual revenues) and Thomson Reuters I/B/E/S (for forward revenues).
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Figure 20.
Predicting Corporate Earnings
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92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 202.5
4.5
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20.522.5
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18.5
20.522.5
Nov
Q3
Q3S&P 500 AGGREGATE REVENUES, NOMINAL GNP, and US BUSINESS SALES OF GOODS(trillion dollars, ratio scale)
S&P 500 Aggregate Revenues ( x 4, nsa)**Business Sales of Goods (saar)*Nominal GNP (saar)
** Revenues are derived by multiplying S&P 500 revenues per share by the S&P 500 divisor for each quarter.* Manufacturing and trade sales.
Source: Bureau of the Census, Bureau of Economic Analysis, and Standard & Poor’s.
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Figure 21.
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 2045
50
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Q3
Q3
S&P 500 AGGREGATE REVENUES(as percent of US GNP and US business sales)
S&P 500 Revenues* / Business Sales**S&P 500 Revenues* / Nominal GNP
* Revenues are derived by multiplying S&P 500 revenues per share by the S&P 500 divisor for each quarter.** Manufacturing and trade sales.
Source: Bureau of the Census, Bureau of Economic Analysis, and Standard & Poor’s.
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Figure 22.
Predicting Corporate Earnings
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50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 2275
3075
6075
9075
1207515075
75
3075
6075
9075
1207515075
Q3
NOMINAL GNP & AFTER-TAX CORPORATE PROFITS(Q4-1949=100, ratio scale)
Nominal GNP7% Growth Path*
After-Tax Corporate ProfitsReported to IRSFrom Current Production**
* Compounded monthly to yield 7% annually.** Including Inventory Valuation Adjustment and Capital Consumption Adjustment, which restate the historical cost basis used in profits
tax accounting for inventory withdrawals and depreciation to the current cost measures used in GDP.Source: Bureau of Economic Analysis.
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Figure 23.
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 223
43
83
123
163
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3
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203243
JanQ3
S&P 500 EARNINGS PER SHARE With 5%-7% CAGR GROWTH PATHS*(dollars, ratio scale)
S&P 500 Earnings Per ShareReported (GAAP)(4-quarter sum)Operating**(4-quarter sum)Forward***
7%
5%
* Compounded monthly to yield 5% and 7% annually.** Excluding write-offs. Thomson Reuters data.
*** S&P 500 12-month forward consensus expected operating earnings per share. Time-weighted average of consensus estimates for current year andnext year.Source: Standard & Poor’s and Thomson Reuters I/B/E/S.
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Figure 24.
Predicting Corporate Earnings
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35 40 45 50 55 60 65 70 75 80 85 90 95 00 05 10 15 20 25.1
20.1
40.1
60.180.1100.1
.1
20.1
40.1
60.180.1
100.1
S&P 500 REPORTED EARNINGS PER SHAREWITH 5%-7% CAGR GROWTH PATHS*
(base period Q4-1934 = 0.18, quarterly, ratio scale) Q3
5%
6%
7%
* Q4-2008 not shown because of large negative value.Note: Shaded areas denote recessions according to the National Bureau of Economic Research.Source: Standard & Poor’s.
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Figure 25.
35 40 45 50 55 60 65 70 75 80 85 90 95 00 05 10 15 20 254
2004
4004
600480041000412004
4
2004
4004
60048004
1000412004
Jan
S&P 500 INDEX PRICE WITH 4% TO 7% CAGR GROWTH PATHS(base period Dec 1934 = 9.26, ratio scale)
4%
5%
6%
7%
8%
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Source: Standard & Poor’s.
Figure 26.
Predicting Corporate Earnings
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93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20-25
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S&P 500 AGGREGATE REVENUES & US NOMINAL GNP(yearly percent change)
S&P 500 Aggregate Revenues*Nominal GNP
* Revenues are derived by multiplying S&P 500 revenues per share by the S&P 500 divisor for each quarter.Source: Bureau of Economic Analysis and Standard & Poor’s.
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Figure 27.
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20-25
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Nov
S&P 500 AGGREGATE REVENUES & US BUSINESS SALES OF GOODS(yearly percent change)
S&P 500 Aggregate Revenues*Business Sales of Goods**
** Manufacturing and trade sales.* Revenues are derived by multiplying S&P 500 revenues per share by the S&P 500 divisor for each quarter.
Source: Bureau of the Census and Standard & Poor’s.
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Figure 28.
Predicting Corporate Earnings
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92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20-12
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Q3
Q3S&P 500 OPERATING MARGIN (S&P data) & REPORTED MARGIN (S&P data)(percent, quarterly)
S&P 500 MarginsS&P OperatingS&P Reported (GAAP)
Source: Standard & Poor’s.
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Figure 29.
47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23-2
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S&P 500 REPORTED PROFIT MARGIN & AFTER-TAX CORPORATE PROFITS MARGIN( excluding IVA & CCAdj*)
Q3
Q3
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S&P 500 Profit Margin: Reported(percent)
Corporate Profits After Tax*(as a percent of nominal GNP)
Capped at 0
Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
* After-tax profits as reported to IRS excluding Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj). These twoadjustments restate the historical cost basis used in profits tax accounting for inventory withdrawals and depreciation to the current cost measuresused in GNP.
Source: Standard & Poor’s and Bureau of Economic Analysis.
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Figure 30.
Predicting Corporate Earnings
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47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 232
4
6
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10
12
2
4
6
8
10
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CORPORATE PROFITS AFTER TAX*(as a percent of nominal GNP)
Q3
* After-tax profits as reported to IRS excluding Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj). These twoadjustments restate the historical cost basis used in profits tax accounting for inventory withdrawals and depreciation to the current cost measuresused in GNP.
Source: Bureau of Economic Analysis.Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
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Figure 31.
47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 2360
65
70
75
60
65
70
75
COMPENSATION OF EMPLOYEES + PRIVATE NONRESIDENTIAL FIXED INVESTMENT(as a percent of nominal GNP)
Q3
Source: Bureau of Economic Analysis.Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
yardeni.com
Figure 32.
Predicting Corporate Earnings
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20204
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S&P 500 PROFIT MARGIN MEASURES(percent)
S&P 500 Operating Profit Margins52-week Forward*Thomson Reuters (Trailing 4Q)S&P (Trailing 4Q)
* Time-weighted average of consensus operating estimates for current and next years.Source: Standard & Poor’s (for actual revenues) and Thomson Reuters I/B/E/S (for forward revenues).
yardeni.com
Figure 33.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201930
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Q3
2/7
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S&P 500 EARNINGS PER SHARE: FORWARD & ACTUAL(dollars)
Earnings Per ShareThomson ReutersOperating(Trailing 4Q)S&P Operating(Trailing 4Q)Forward*
* Time-weighted average of consensus operating estimates for current and next years.Source: Standard & Poor’s (for actual revenues) and Thomson Reuters I/B/E/S (for forward revenues).
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Figure 34.
Predicting Corporate Earnings
Page 17 / February 11, 2019 / Chapter 13 Charts: Predicting Corporate Earnings www.yardeni.com
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020650
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1/31
Q3
S&P 500 REVENUES PER SHARE: FORWARD (TR data) & ACTUAL (S&P data)(dollars)
Revenues Per Share52-Week Forward*Actual (Trailing 4Q)
* Time-weighted average of consensus operating estimates for current and next years.Source: Standard & Poor’s (for actual revenues) and Thomson Reuters I/B/E/S (for forward revenues).
yardeni.com
Figure 35.
0
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1400
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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202050
75
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125
150
50
75
100
125
150
Q3
S&P 500 BUYBACKS, DIVIDENDS, & OPERATING EARNINGS(billion dollars, trailing four-quarter)
BuybacksDividendsOperating EarningsBuybacks+Dividends
Buybacks+Dividendsas percent ofOperating Earnings
Source: Standard & Poor’s.
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Figure 36.
Predicting Corporate Earnings
Page 18 / February 11, 2019 / Chapter 13 Charts: Predicting Corporate Earnings www.yardeni.com
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80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 2265
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75
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95
100
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85
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100
2017
S&P 500 COMPANIES PAYING A DIVIDEND(percent of total)
Since the 2001 low, there has been an uptrend in dividend payers.
Source: Standard & Poor’s.
yardeni.com
Figure 37.
64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22-50
0
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150
-50
0
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150
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Q3
DIVIDEND PAYOUT RATIOS(percent)
S&P 500 Dividends(as a percent of S&P 500 reported net income)
NIPA Dividends(as a percent of NIPA After-Tax Profits*)
* From Current Production. Including IVA & CCadj. These two adjustments restate the historical cost basis used in profits tax accounting for inventorywithdrawals and depreciation to the current cost measures used in GDP.Source: Bureau of Economic Analysis and Standard & Poor’s.
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Figure 38.
Predicting Corporate Earnings
Page 19 / February 11, 2019 / Chapter 13 Charts: Predicting Corporate Earnings www.yardeni.com
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46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22.2
20.2
40.2
60.2
80.2100.2
.2
20.2
40.2
60.2
80.2100.2
Q3S&P 500 DIVIDENDS & RETAINED EARNINGS PER SHARE(dollars, trailing 4-quarter sum, ratio scale)
DividendsRetained Earnings*
* Reported earnings minus dividends per share.Source: Standard & Poor’s.
yardeni.com
Figure 39.
45 50 55 60 65 70 75 80 85 90 95 00 05 10 15 20 25.7
50.7
100.7
150.7
200.7250.7300.7
.7
50.7
100.7
150.7
200.7250.7300.7
Q4
S&P 500 TRAILING 4-QUARTER DIVIDENDS WITH 5% TO 8% CAGR GROWTH PATHS(base period Dec 1946 = 0.71, ratio scale)
5%
6%
7%
8%
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Source: Standard & Poor’s.
Figure 40.
Predicting Corporate Earnings
Page 20 / February 11, 2019 / Chapter 13 Charts: Predicting Corporate Earnings www.yardeni.com
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60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 2220
420
820
1220
16202020242028203220
20
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820
1220
16202020242028203220
Q3CORPORATE CASH FLOW(ratio scale, billion dollars, saar)
Corporate Cash Flow*
Tax-Reported Depreciation***Economic Depreciation**
* After-tax retained earnings plus tax-reported depreciation.** Corporate capital consumption allowances.
*** Corporate capital consumption allowances with capital consumption adjustment.Source: Bureau of Economic Analysis.
yardeni.com
Figure 41.
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22-250
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0
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Q3
CAPITAL CONSUMPTION ADJUSTMENT*(billion dollars, saar)
Tax-Reported > Economic Depreciation
Tax-Reported < Economic Depreciation
* This adjustment is used to restate the historical cost basis used in profits tax accounting for depreciation to the current cost measures used in GDP.Source: Bureau of Economic Analysis.
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Figure 42.
Predicting Corporate Earnings
Page 21 / February 11, 2019 / Chapter 13 Charts: Predicting Corporate Earnings www.yardeni.com
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50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 2210
510
1010
1510
2010251030103510
10
510
1010
1510
2010251030103510
Q3CORPORATE & NONFINANCIAL CORPORATIONS (NFC): CASH FLOW(billion dollars, saar, ratio scale)
Corporate Cash Flow*NFC Cash Flow (BEA measure)**NFC Internal Funds (Fed measure)
* After-tax retained earnings plus tax-reported depreciation.** After-tax operating retained earnings plus tax-return-based depreciation.
Source: Bureau of Economic Analysis and Flow of Funds Accounts.
yardeni.com
Figure 43.
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20.2
.6
1.0
1.4
1.8
2.2
.2
.6
1.0
1.4
1.8
2.2Q3NONFINANCIAL CORPORATE BUSINESS
(trillion dollars, 4-quarter sum, ratio scale)
Nonfinancial CorporateCapital Expenditures*Internal Cash Flow
* Includes nonresidential fixed investment plus residential fixed investment, and inventory change with IVA.Source: Flow of Funds Accounts.
yardeni.com
Figure 44.
Predicting Corporate Earnings
Page 22 / February 11, 2019 / Chapter 13 Charts: Predicting Corporate Earnings www.yardeni.com
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80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20.1
.3
.5
.7
.9
1.1
1.3
1.51.71.92.1
.1
.3
.5
.7
.9
1.1
1.3
1.51.71.92.1
Q3
Q3NONFINANCIAL CORPORATE BUSINESS(trillion dollars, 4-quarter sum, ratio scale)
Nonfinancial CorporateGross Fixed InvestmentCapital Consumption Allowance*
* Consumption of fixed capital plus the capital consumption adjustment.Source: Flow of Funds Accounts.
yardeni.com
Figure 45.
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 220
50
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0
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550
Q3
NONFINANCIAL CORPORATE BUSINESS(billion dollars, 4-quarter sum)
Net Fixed Investment*
* Gross fixed investment less consumption of fixed capital plus the capital consumption adjustment.Source: Flow of Funds Accounts.
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Figure 46.
Predicting Corporate Earnings
Page 23 / February 11, 2019 / Chapter 13 Charts: Predicting Corporate Earnings www.yardeni.com
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94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22-900
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-700
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Q3
Q3
NONFINANCIAL CORPORATIONS: NET NEW ISSUES(billion dollars, 4-quarter sum)
NFC Net New Issues
EquitiesBonds
Source: Flow of Funds Accounts.
yardeni.com
Figure 47.
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200
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Q3
Jan
Q4
Q3
S&P 500 DIVIDENDS & BUYBACKS(billion dollars, annualized)
Buybacks
Dividends
S&P 500 Index
Source: Standard & Poor’s.
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i.com
Figure 48.
Predicting Corporate Earnings
Page 24 / February 11, 2019 / Chapter 13 Charts: Predicting Corporate Earnings www.yardeni.com
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