Earnings Mean Reversion: When Estimates Snap Back
Consensus earnings estimates now sit close to 50% above trend, and that gap is exactly where an earnings mean reversion tends to begin. This has been an incredible year in that Wall Street has spent all of it raising its earnings estimates, and the second-quarter season only accelerated the trend. Analysts began the year expecting S&P 500 earnings to grow about 15%. By the close of Q2, that number had been ratcheted up to roughly 24%, with 2027 and 2028 estimates drifting higher right behind it.1 Rising profits are good news. The question I keep coming back to is whether the slope of…
The skinny
The skinny isn't ready yet — notes appear once the transcript is processed.