Tesla, Take-Two and Exxon are among the -2-

Here’s how the weighted aggregate rolling 12-month consensus estimates among analysts polled by FactSet for revenue and earnings have changed since June 30 for the 11 sectors of the S&P 500 and for the full index. The sectors are sorted by ascending changes in EPS estimates:

Sector                  Change in rolling 12-month EPS estimate since June 30  Change in rolling 12-month sales per share estimate since June 30  2022 price change  Price change -- June 30 through Sept. 21  Forward P/E  Forward P/E as of Dec. 31 
Materials                                                               -6.2%                                                              -0.7%               -22%                                      -4%         13.0                       17.0 
Communication Services                                                  -5.6%                                                              -2.5%               -36%                                      -9%         14.7                       20.9 
Information Technology                                                  -3.5%                                                              -1.3%               -27%                                       0%         19.9                       28.1 
Health Care                                                             -1.3%                                                               1.5%               -13%                                      -4%         15.6                       17.2 
Consumer Staples                                                        -1.0%                                                               1.1%                -8%                                      -2%         19.9                       21.8 
Consumer Discretionary                                                  -0.4%                                                               0.4%               -25%                                      12%         26.5                       33.0 
Industrials                                                             -0.2%                                                               0.7%               -17%                                       1%         16.4                       20.6 
Real Estate                                                              1.1%                                                               0.3%               -26%                                      -6%         17.0                       24.2 
Financials                                                               1.1%                                                               1.4%               -18%                                       2%         11.5                       14.7 
Utilities                                                                2.3%                                                               1.3%                 2%                                       4%         20.2                       20.8 
Energy                                                                   8.0%                                                               6.6%                38%                                       7%          8.4                       11.0 
S&P 500                                                                 -1.0%                                                               0.9%               -20%                                       0%         16.4                       21.5 
                                                                                                                                                                                                                                     Source: FactSet 

Rolling forward EPS estimates have declined for seven of the 11 S&P 500 sectors since June 30. For the full benchmark index, they are down 1%. Sales estimates are down for “only” three of the 11 sectors. Then again, if we had done a similar comparison a year earlier, all 11 sectors’ estimates for EPS and sales would have been higher, while the S&P 500’s rolling forward EPS estimate would have been up 6.1%, with the sales estimate up 0.9% .

Looking to the right of the chart, forward P/E ratios have declined considerably. For the full S&P 500, the current P/E valuation of 16.4 compares to an averages of 18.9 for five years, 17.2 for 10 years and 15.7 for 15 years, according to FactSet.

Why might the P/E ratios have further to fall? Because the flow of estimate cuts may continue. This alone can raise P/E ratios, but the combination of rising interest rates and estimate cuts doesn’t bode well.

On the other hand, the two price-change columns underline the stock market’s tendency to look ahead.

Biggest sales estimate cuts among the S&P 500

Among the S&P 500, 172 companies have had rolling consensus 12-month sales estimates decline since June 30. Here are the 20 for which these estimates have been cut most severely:

Company                          Ticker  Change in rolling 12-month sales estimate since June 30  Change in rolling 12-month EPS estimate since June 30  Price change since June 30  2022 price change   P/E  P/E as of June 30 
Micron Technology Inc.             MU                                                       -30%                                                   -57%                         -9%               -46%  10.8                5.2 
Western Digital Corp.             WDC                                                       -21%                                                   -63%                        -22%               -47%  10.5                5.1 
Seagate Technology Holdings PLC   STX                                                       -21%                                                   -39%                        -17%               -47%  10.5                7.7 
Nvidia Corp.                      NVDA                                                      -17%                                                   -30%                        -13%               -55%  32.4               25.8 
Moderna Inc.                      MRNA                                                      -17%                                                   -28%                        -12%               -50%   9.4                7.7 
Stanley Black & Decker Inc.       SWK                                                       -14%                                                   -39%                        -20%               -56%  12.9                9.9 
Roper Technologies Inc.           ROP                                                       -12%                                                    -9%                         -6%               -24%  25.7               24.7 
Freeport-McMoRan Inc.             FCX                                                       -11%                                                   -33%                         -4%               -33%  12.1                8.4 
Intel Corp.                       INTC                                                      -11%                                                   -28%                        -24%               -45%  11.3               10.8 
D.R. Horton Inc.                  DHI                                                       -11%                                                   -14%                          8%               -34%   5.2                4.1 
Teradyne Inc.                     TER                                                       -11%                                                   -16%                        -10%               -50%  17.3               15.9 
NVR Inc.                          NVR                                                       -11%                                                   -16%                          1%               -32%  10.1                8.4 
Twitter Inc.                      TWTR                                                      -10%                                                   -40%                         10%                -5%  55.8               30.3 
Invesco Ltd.                      IVZ                                                        -9%                                                   -15%                         -1%               -30%   7.5                6.5 
SVB Financial Group               SIVB                                                       -9%                                                   -16%                         -9%               -47%  10.5                9.7 
PerkinElmer Inc.                  PKI                                                        -9%                                                    -7%                        -11%               -37%  18.8               19.7 
Garmin Ltd.                       GRMN                                                       -8%                                                   -16%                        -14%               -38%  15.8               15.5 
Newell Brands Inc.                NWL                                                        -8%                                                   -16%                        -20%               -30%   9.1                9.5 
Align Technology Inc.             ALGN                                                       -8%                                                   -11%                         -4%               -66%  22.6               21.0 
T. Rowe Price Group               TROW                                                       -8%                                                   -16%                         -3%               -44%  13.0               11.3 
                                                                                                                                                                                                                Source: FactSet 

For most of these companies, the EPS estimate cuts have been much greater than the sales estimate cuts, reflecting how important it is to hit certain revenue levels to improve profit margins.

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09-23-22 0817ET

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