crazy_rich_asians_cast.jpg

Crazy Rich Earnings

Yes I am swept up in the hype of the release of the movie "Crazy Rich Asians." As an Asian-American, I am hyped to finally see a major motion picture with an all Asian cast which we haven't seen since 1993's Joy Luck Club. Please go out and support the film! But today's blog post isn't about the film, but about S&P earnings season which I'm calling crazy rich earnings. We have been bullish on the market because of the extremely strong earnings coming out of corporate America. While others have been warning about valuations (for years), remember that no bear market was caused by solely by over-valuation. How good has earnings season been? Let's take a look.

Hot earnings seasons

The second quarter earnings season has just about wrapped up with 95.6% of the S&P 500's market cap reported. Companies have beaten estimates by 5.3% with 76% beating earnings estimates -- this compares to 4.8% and 69% over the past 3 years according to CSFB research. The 2nd quarter expectations are for revenues, earnings and EPS growth of 9.6%, 23.4% and 25.5%, respectively. These are impressive numbers across the board. Tax reform has been a boost for US corporations with the tax change adding 7.9% to EPS. I'm kind of blown away by the thought that the economy is so strong that even without tax reform, earnings would have growth 17.6%.

The good news is that earnings are expected to continue to strengthen through year end with 4th quarter expectations for over 30% earnings growth.

snp earnings august 18

 

Strong retail numbers

This week, Walmart and Home Depot posted extremely strong numbers which shows that retailers are still able to thrive against Amazon. Walmart delivered their strongest comp store sales growth, +4.5%, in a decade. Shoppers not only visited their stores more often but they also spent more per trip. CEO Doug McMillon said, "Customers tell us that they feel better about the current health of the U.S. economy as well as their personal finances. They're more confident about their employment opportunities." Home Depot also reported similar strength in their business. Sales on a per-square-foot basis climbed 8.6 percent during the quarter. It also said the average shopper's ticket jumped 5 percent to $66.20. Clearly consumers are feeling good about their financial outlook. This bodes well for the US economy which is largely dependent on strong and healthy consumer spending.

subscribe to our podcast

Share This Story, Choose Your Platform!

About the Author: Chris Wang

Chris Wang

IMPORTANT DISCLOSURE INFORMATION 

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Runnymede Capital Management, Inc.-"Runnymede"), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Runnymede.  Please remember that if you are a Runnymede client, it remains your responsibility to advise Runnymede, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Runnymede is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Runnymede's current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: Runnymede does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Runnymede's web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Search Website

Annuity Review Database

Recent Posts

About our Podcast