2023 Wasn’t Just Price
In 2023 there was around 15% of earnings growth. That’s a bit lower than the total return on the S&P 500, but multiples also expanded by 30%, and had around 1.5% in dividends.
We are close to wrapping up earnings season for the last quarter of 2023. Around 80% have reported to date.
I wanted to show that the performance from last year actually had some meat behind it. Overtime earnings growth is actually what matters for stock prices. Long term return attribution is about 70% earnings growth, 20% multiple expansion, and 10% dividends.
I simply took the price to earnings multiple and divided it by the price to get the earnings per share on the S&P 500.
In 2023 there was around 15% of earnings growth. That’s a bit lower than the total return on the S&P 500, but multiples also expanded by 30%, and had around 1.5% in dividends.
The current blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings growth rate for the fourth quarter is 3.2%.
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