From Kris Sayce – Port Phillip Insider (Australia) –
The difference between actual and forecast profits has continued to grow. In order for S&P 500 companies to match the forecasts, earnings per share have to rise 20% over the next year.
Such an increase hasn’t happened since the period from mid-2010 through to mid-2011. But that was a different time.
That was when stocks were still recovering from the 2008 meltdown. That was when the US Federal Reserve was openly printing billions of dollars to screw down interest rates.
But the earnings picture isn’t the only reason to be suspicious about the sustainability of current stock prices.
To explain our point, we dug a little deeper. Rather than just looking at profit numbers, we checked out revenue numbers.
We looked at the S&P 500 index, and ran a count of how many stocks in the index had shown revenue growth over the past five months.
Remember, the S&P 500 contains the US market’s biggest listed companies. Many of these companies are the biggest of their type in the world.
So, just how many S&P 500 companies have grown revenue over the past year?