Summer 2013 Snapshot of Expected Future S&P 500 Earnings

Since we last looked at the S&P 500's expected trailing twelve-month earnings per share some three months ago, the future for the S&P 500's forecast earnings has grown dim.

We can see that's the case in comparing our previous 17 May 2013 snapshot of the S&P 500's expected trailing year earnings per share for the fourth quarter of 2013 (2013-Q4, ending 31 December 2013) with our new snapshot just taken on 15 August 2013. To put the situation bluntly, the spike in optimism that investors had for a significantly brighter future in 2013 just three months ago has collapsed almost back to where it was six months ago.

Here, we've been tracking the expectations for the fourth quarter of 2013. Looking at the trailing year earnings per share expected for 2013-Q4, we see that investors have decreased the level of earnings they expect to be reported for the S&P 500 in 2013 by $7.27 per share as compared to our previous snapshot that was taken just three months ago, with the new trailing twelve month figure now expected to be $100.91 per share.

This is close to the level that investors had first expected for 2013-Q4 back on 15 February 2013.

One observation we can take away from this edition of our earnings snapshot chart is that there was an earnings recession that ran approximately from the first quarter of 2012 through the first quarter of 2013, which we recognize in the revised earnings per share that have been reported by Standard & Poor for the S&P 500.

What's more remarkable however is that the earnings per share data that was originally reported during that period did not indicate that situation. Our trailing twelve month earnings per share snapshots for 15 January 2012, 20 May 2012, and 13 August 2012 all indicated that earnings were rising during the early portion of this period of recession for stock market earnings.

It's not until our snapshot taken on 8 November 2012 that we see that the earlier earnings data had been revised enough to indicate a slow-to-no growth condition in the U.S. economy. Since then, our snapshots taken on 15 February 2013, 17 May 2013 and the newest on 15 August 2013 all confirm that earnings in the private sector of the U.S. economy actually contracted during these quarters.

By contrast, the number of publicly-traded companies acting to cut their dividends per share each month provided a near real-time confirmation of those recessionary conditions being present in the U.S. economy. Our most recent reading of that data indicates that the private sector of the U.S. economy is still experiencing recessionary conditions, but is perhaps finally beginning to exit from them.

But then, as we keep pointing out, dividends provide the clearest signal of the state of the private sector of the U.S. economy. It's just a bonus that they are also the fundamental driver of stock prices.

Reference

Silverblatt, Howard. S&P Indices Market Attribute Series. S&P 500 Monthly Performance Data. S&P 500 Earnings and Estimate Report. [Excel Spreadsheet]. Last Updated 15 August 2013. Accessed 17 August 2013.

Spring 2013 Snapshot of Expected Future S&P 500 Earnings

Since we last looked at the S&P 500's expected trailing twelve-month earnings per share some three months ago, the future for the S&P 500's forecast earnings has become considerably brighter going forward. Which is good, because it also suggests that the U.S. economy went through a recessionary period in the second half of 2012, from which investors are now expecting a recovery.

We can see that's the case in comparing our 15 February 2013 snapshot of the S&P 500's expected trailing year dividends per share for the fourth quarter of 2013 (2013-Q4, ending 31 December 2013) with our new snapshot just taken on 17 May 2013:

Here, for 2013-Q4, we see that investors have increased the level of earnings they expect to be reported for the S&P 500 in 2013 by $7.47 per share from our previous snapshot taken just over three months ago, with the new trailing twelve month figure now expected to be $108.18 per share.

This is close to the level that investors had first expected for 2013-Q4 back on 17 January 2012. But then, back in those heady days, they also expected that the earnings for the S&P 500 in 2012 would be $12.80 per share better than the $86.51 per share that they actually turned out to be. (Note: Standard and Poor may continue to revise its earnings estimate for 2012 for some time still as more refined information becomes available and as companies might restate their previously reported earnings.)

Looking at the full range of values that investors have forecast for the S&P 500's trailing year earnings for 2012, we see that they have ranged from a high of $100.07 per share, which was recorded back on 20 May 2012, to a low of $86.51 per share, as currently estimated. The low value of $86.51 per share also would appear to mark the bottom of an earnings recession for the index.

So why didn't stock prices crash at the same time? Well, as we keep pointing out, earnings don't drive stock prices. Dividends do. And although this confuses many of the more dim-witted commenters at Seeking Alpha, the changes that have taken place in dividends since mid-November 2012 are almost entirely responsible for the rally in stock prices since that time. Or at least up to nearly the end of April 2013, after which the story changes.

But we don't expect that certain people will appreciate that we've already told that story, and don't feel compelled to dumb it down for their benefit....

Reference

Silverblatt, Howard. S&P Indices Market Attribute Series. S&P 500 Monthly Performance Data. S&P 500 Earnings and Estimate Report. [Excel Spreadsheet]. Last Updated 9 May 2013. Accessed 17 May 2013.

Winter 2013 Snapshot of Expected Future S&P 500 Earnings

Starting last year, we began taking snapshots of Standard & Poor's forecasts for where the S&P 500's trailing twelve month earnings per share would be in the future at approximately three-month intervals. Our chart below illustrates how the expected future has changed over time:

Since our last snapshot in November 2012, we find that the earnings for the S&P 500 in the last two quarters of 2012 and the first two quarters of 2013 are now expected to be recorded at levels below where they had been expected three months ago.

But not all is gloomy, as S&P is now projecting a slight increase over previous expectations for earnings in the third and fourth quarters of 2013.

Still, perhaps the most important take-away from our chart though is how different the earnings expected for 2012 (shown as our snapshot of expected future earnings on 17 January 2012) are from where the level at which they are being finalized (shown as our 15 February 2013 snapshot). Going by the S&P 500's estimated total market capitalization of $9.8 trillion in March 2012, the fall in expected earnings for 2012 from January of that year to the present means that over $80 billion worth of earnings expected in 2012 failed to materialize during the year.

We just wonder if today's snapshot of the expectations for earnings in 2013 is as off-target!

Previously on Political Calculations

The previous snapshots we've taken of the way the future looked to investors for the S&P 500 at different points of time are presented in reverse chronological order below:

• Winter 2013 Snapshot of Expected Future S&P 500 Earnings


• Fall 2012 Snapshot of Expected Future S&P 500 Earnings


• Summer 2012 Snapshot of Expected Future S&P 500 Earnings


• The Spring 2012 Snapshot of Expected S&P 500 Earnings


• The Changing Futures for S&P 500 Earnings


• How Good Are Earnings Forecasts?

References

Silverblatt, Howard. S&P Indices Market Attribute Series. S&P 500 Monthly Performance Data. S&P 500 Earnings and Estimate Report. [Excel Spreadsheet]. Last Updated 14 February 2013. Accessed 15 February 2013.

Quarterly Data for the S&P 500, Since 1871

Did you know that there isn't anywhere on the web where you can go and get quarterly data for the S&P 500 before 1988? It's true, or at least it was true, until today!

Prior to today, the only place you could obtain data like the amount of dividends per share (DPS) or earnings per share (EPS) for S&P 500 companies was Standard & Poor, who only makes available the data since 1988 [Excel spreadsheet].

Meanwhile, you can obtain trailing year DPS and EPS data for the S&P 500 and its predecessor indices and component stocks from Yale's Robert Shiller [Excel spreadsheet], or perhaps more easily from our S&P 500 at Your Fingertips tool, which go all the way back to January 1871. Unlike Professor Shiller's spreadsheet, our tool also calculates the rate of return between any two calendar months you select, both with and without the reinvestment of dividends and with and without the effects of inflation.

It's a strange omission, if you think about it, because earnings and dividends are both reported and paid by the quarter!

So we're fixing that situation today. We've used S&P's available quarterly data since 1988 and our trailing year data to work out what the S&P 500's quarterly data would have to be for each quarter going all the way back to 1871-Q1.

You can access our data in the tool below, or if you prefer your data in graphical format, in the charts that appear below our tool:

Year and Quarter for S&P 500 Data
Input Data	Year	Quarter
Select Year and Quarter	1871 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1882 1883 1884 1885 1886 1887 1888 1889 1890 1891 1892 1893 1894 1895 1896 1897 1898 1899 1900 1901 1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013	1 2 3 4

Historic Quarterly Stock Market Data
Estimated Results	Values
Average Price per Share in Month Ending Quarter
Quarterly Dividends per Share
Quarterly Earnings per Share

Now for the charts covering the quarterly data for the S&P 500 and its predecessor indices and component stocks since the first quarter of 1871. Our first chart shows the S&P 500's average price per share in the month ending the quarter in question:

Next, let's look at the dividends per share that were paid out in each quarter from 1871-Q1 through 2012-Q4:

Our third chart reveals the earnings per share that would be reported for each quarter from 1871-Q1 through 2012-Q4:

If you're ever bored and looking for something to do, overlay the data for the price per share chart and the dividends per share chart - you might make a pretty unique discovery!

Update 16 February 2013: Speaking of which, it certainly would be a lot easier to make that discovery if we also made the Quarterly S&P 500 Data Since 1871-Q1 available to you in spreadsheet form!

Image Source: Northern California Grantmakers

Fall 2012 Snapshot of Expected Future S&P 500 Earnings

Earlier this year, we began taking snapshots of S&P's forecast trailing twelve month earnings per share for the S&P 500 at roughly three month intervals. Our chart below shows how the expected future for earnings has changed over time:

Since our last snapshot in August 2012, the outlook for the expected amount of S&P 500 company earnings has continued to decline, although not as much as the decline from May to August.

Looking at the overlap of historic data and old forecasts, we see that the future vision of investors in December 2010 looking forward to the end of 2012 appears to closely match how things have actually played out over time.

We find that interesting because we would have expected more recent snapshots of the forecast earnings for the S&P 500 to more closely match the actual results than that much older forecast.

The continuing moral of the story: future earnings projections are not necessarily very good indications of actual future earnings. It's simply a good thing that changes in earnings expectations have so little effect upon stock prices or they would be way more volatile!

Previously on Political Calculations

The previous snapshots we've taken of the way the future looked to investors for the S&P 500 at different points of time are presented in reverse chronological order below:

• Fall 2012 Snapshot of Expected Future S&P 500 Earnings


• Summer 2012 Snapshot of Expected Future S&P 500 Earnings


• The Spring 2012 Snapshot of Expected S&P 500 Earnings


• The Changing Futures for S&P 500 Earnings


• How Good Are Earnings Forecasts?

References

Silverblatt, Howard. S&P 500 Earnings and Estimates Report. [Excel Spreadsheet]. Standard and Poor's Market Attributes. Accessed 8 November 2012.

Summer 2012 Snapshot of Expected Future S&P 500 Earnings

Three months ago, we took a snapshot of the future investors expected for the S&P 500's earnings per share. At the time, we noted that investors had taken a dimmer view of the future for 2012, but were expecting better things in 2013.

Today, we can report that investors have taken a dimmer view of future stock market earnings across the board. Our chart below shows how much their future expectations have changed since 20 May 2012, as compared to earlier forecasts going back to the gloomiest days for the market in 2009:

The future just isn't as bright as it used to be just three short months ago....

Data Source

Silverblatt, Howard. S&P Indices Market Attribute Series. S&P 500 Monthly Performance Data. S&P 500 Earnings and Estimate Report. [Excel Spreadsheet]. Updated 9 August 2012. Accessed 13 August 2012.

The Spring 2012 Snapshot of Expected S&P 500 Earnings

Now that we're halfway through the second quarter of 2012, how has the expected future changed for the U.S. stock market earnings changed from the beginning of the year?

Our chart below reveals the answer!

In this chart, we see that compared to our snapshot from 19 January 2012, investor expectations for earnings in 2012 have dimmed, especially for the first three quarters of the year.

Meanwhile, they appear to expect that 2013 will provide a much better environment for the S&P 500's earnings per share.

As for why they expect that the future will play out this way is something that we'll leave up to your imagination!

The Changing Futures for S&P 500 Earnings

The current edition of Standard and Poor's S&P 500 Earnings and Estimates spreadsheet features a pretty remarkable chart, showing how the future expectations for the index' operating earnings per share for the second quarter of 2012 has changed from 18 April 2011 through 8 March 2012.

In the chart, we can see that the future for expected earnings in 2012-Q2 isn't as bright as it used to be, as the forecast future operating earnings per share for the S&P 500 is more than $2.00 per share less than it was when it peaked just seven months ago!

What a difference that seven months can make!

But those are operating earnings per share - what about actual (or "As Reported") earnings per share? The sum of all the actual earnings that the 500 companies that make up the S&P 500 index will collectively record in their financial statements, divided by their collective number of shares outstanding?

Here, we've been periodically sampling the data from S&P's Earnings and Estimates spreadsheet to create the following chart showing the expected future for S&P 500 earnings per share at various snapshots in time, from 2009-Q1 through 2013-Q4.

In this chart, we can see that the future for the S&P 500's earnings per share in 2012 really lost steam between June and October 2011, closely matching what S&P has recorded it its chart showing the expected future for operating earnings per share.

We'll see just how closely the future for earnings per share plays out as compared to what S&P predicts!

Standard and Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 8 March 2012.