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Feb 20

EDSP = Earnings Drive Stock Prices

  • February 20, 2024
  • CWA Investment Team
  • Richard Barrett

With 82% of the companies in the SP500 now having reported their 4Q23 results, the theme of “earnings growth” is clearly back.  YoY earnings growth of +14%, which is the best showing since 4Q21.  We think earnings continue to grow double digits for 2024 (we are expecting better growth in the back half of the year) and 2025.

There’s a reason why stocks basically went nowhere from October 2021 to October 2023:  corporate earnings were basically flat.

There’s also a reason why the SP500 has returned approximately +340% since January 2009 thru December 2023:  corporate earnings for the SP500 went up +350% over similar time frame.

The best, most highly correlated variable for the direction of the stock market over time is the direction of earnings over time.  EDSP…earnings drive stock prices.

Source: Jones Trading and CBilello Research as of February 20, 2024

Richard Barrett
Chief Investment Officer


CW Advisors LLC (“CWA”) is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”). Registration does not imply a certain level of skill or training. For additional information, please visit our website at cwadvisorsgroup.com or visit the Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov by searching with CWA’s CRD #310873.

This note is provided for informational purposes only. CWA believes this information to be accurate and reliable but does not warrant it as to completeness or accuracy. This note may include candid statements, opinions and/or forecasts, including those regarding investment strategies and economic and market conditions; however, there is no guarantee that such statements, opinions and/or forecasts will prove to be correct. All such expressions of opinions or forecasts are subject to change without notice. Any projections, targets or estimates are forward looking statements and are based on CWA’s research, analysis, and assumption. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. This note is not a complete analysis of all material facts respecting any issuer, industry or security or of your investment objectives, parameters, needs or financial situation, and therefore is not a sufficient basis alone on which to base an investment decision. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this note. No portion of this note is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax or legal advice. Investing entails the risk of loss of principal.

 

 

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    © CW Advisor Solutions
    CW Advisor Solutions (CWAS) is a division of CW Advisors, LLC (CWA), which is a registered investment advisor with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. For additional information, please visit the Investment Adviser Public Disclosure website by searching with CWA's CRD #310873. Investment Advisory services are offered and rendered through CWA. CWA acquired Pinnacle Advisory Group, Inc. (Pinnacle) on April 30, 2021.