We're looking at the past five weeks of Q4 earnings for . This week marks the unofficial end of his 2023 Q4 earnings for Walmart (NYSE:). Despite the negative outlook for the November and December 2023 quarters, the actual Q4 '23 S&P 500 EPS growth was +10% as of today.
Walmart's guidance surprised analysts a bit, and as a result, despite healthy revisions to Walmart's earnings forecasts, there was little upward revision to EPS for the '25 and '26 calendars. (More on this in a future blog post.)
There's been enough talk about Nvidia (NASDAQ:). I have little to add to this story.
Apple's EPS and revenue revisions:
AAPL EPS Estimate Revision
Apple (NASDAQ:) EPS estimate revisions peaked in May '22 and bounced back through August '23. Looking at Apple's negative EPS revision for each fiscal year since August 2023, here's what it looks like:
- FY2024: -1%
- FY2025: -2%
- FY2026: -7%
- FY2027: -3%
9/30 settlement of accounts
AAPL Earnings Estimate Revision
Starting in May 2022, Apple's revenue forecasts have been revised downward. Looking at the downward revisions, the reduction rates for each year are as follows.
- FY2024: -11%
- FY2025: -12%
- FY2026: -17%
These numbers are more than a little surprising, and not in a good way.
So what's going on with Apple? Hardware growth is slowing as major mobile phone companies shift to service businesses. Is the iPhone a commodity anymore? Is Apple finding it harder to innovate around his iPhone?
Looking at the return data (provided by YCharts), here are the annual returns for Apple and the S&P 500 from December 31, 2021 to February 22, 2024.
- apple: +1.31%
- SPXTR: +4.80%
Apple (stock price) has been almost flat for 26 months.
Just saying.
S&P 500 data:
- This week's fourth quarter estimate (FFQE) is $242.76, up from $242.57 last week and $243.98 printed on January 5th. (It is positive that future forecasts have not been revised downward, as is the typical pattern.)
- FFQE's P/E ratio is 21x and last week it was 20.7x. So we continue to see a bit of PE expansion.
- The S&P 500's earnings yield has declined for eight consecutive weeks, starting at more than 5% in 2025 and now at 4.77%. The better-than-expected S&P 500 EPS probably limits further declines.
- The bottom-up estimate for Q4 2023 is currently $57.14, while the estimate for early January 2024 is $54.69.
- S&P 500 EPS upside surprise is still 6.8%. I thought it probably would have been fixed even higher after NVDA and WMT.
- S&P 500 earnings upside surprise remains 1.1%
Conclusion:
In the coming weeks, a number of companies will begin reporting their February 2024 quarter-end results, including Nike (NYSE:), FedEx (NYSE:), Micron (NASDAQ:), and more.
The companies this blog follows will not release a report next week.
Apple's sales forecast revisions are interesting.
Disclaimer: This is not advice or recommendation. Past performance does not guarantee or indicate future results. Investments can result in loss of principal, even over a short period of time. Readers should determine their own comfort with portfolio volatility and adjust accordingly. All EPS and earnings data for the S&P 500 and individual companies are purchased through subscriptions through LSEG or London Stock Exchange Group (LON:). For more information, please email tajinder.dhillon@LSEG.com.
