'19 profitability is up 0.1% to 11%
ROB
'16 ROB was 15.5%
'17 ROB is down 0.2% to 17%
'18 ROB is down 0.2% to 16.2%
'19 ROB is down 0.1% to 15.4%
The analysts see a very positive future. 10-ish percent earnings growth and 5-ish percent revenue growth is something to get bullish about. I think valuations are a little high but you could say I’m splitting hairs. It’s a 20 trailing PE, but if things go as expected (big if), you’re paying a 15 PE on ’19 earnings.
Value is obviously in the eye of the beholder.
What I continue to worry about is how a 2% GDP world (which is what the Fed sees for a while) can generate 5% sales growth for the S&P 500. Some will say that we should look at the global growth rates… ok, global GDP for ’17, ’18, ’19 is expected to be 3.3%, 3.4%, 3.2%.
The S&P 500 has annual revenue about 11 trillion… global GDP is about 85 trillion…. So S&P 500 revenues are about 13% of global activity. How the heck can the S&P grow significantly differently than the world?