What Corporate Earnings Are Telling Us About Equity Valuations

What Corporate Earnings Are Telling Us About Equity Valuations

Article Summary

  • According to FactSet’s latest release, 77% of earnings beat analyst expectations, but 85% of revisions guided negatively.
  • S&P 500 forward P/E along with the CAPE ratio is pacing higher than its historical 10-year average. which may indicate a bearish signal.
  • In a low-yield interest rate environment and weakness overseas, and regardless of historical valuation metrics, stocks may still be the best asset class option.

Just six weeks into 2015, stocks are hitting new record highs. The S&P 500 briefly closed above 2100 this week, a historic high for the index, and it’s up nearly 2.5% YTD. Despite macroeconomic headwinds like oil prices and the European stimulus plan, investors seem to be inexorably optimistic…

 

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