As another corporate earnings season begins, veteran investors won’t be surprised to see headlines about companies beating estimates for revenue and profits. The combination of companies’ guidance and Wall Street analysts’ own estimates sets up an underpromise/overdeliver scenario.
Typically, between 70% and 80% of companies in the S&P 500 SPX report profit (at least) that comes in ahead of expectations.
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Those beats set up increases to consensus earnings estimates for subsequent quarters and entire fiscal years. Although the beats are expected, their flow is important to help support rising share prices over the long term.
So now the question is whether or not Nvidia Corp. NVDA has more blowout quarters ahead. The company’s stock has returned 172% this year, with dividends reinvested, following a 239% increase in 2023. The stock now trades at a forward price-to-earnings ratio of 36.7, based on Thursday’s closing price and the consensus 12-month earnings-per-share estimate among analysts polled by FactSet. This might seem high when compared with the S&P 500’s weighted forward P/E of 21.8, but Nvidia has been increasing its profits much more quickly than the index has. And Nvidia’s forward P/E was 34.5 at the end of 2022, while the S&P 500’s forward P/E was 16.7.
The company is expected to release its next set of results on Nov. 14, for its fiscal quarter that ends Oct. 27. But Emily Bary looked further ahead to explain why Nvidia’s January quarter is likely to begin a new cycle of dramatic beats for sales and profits.
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When you’re shopping around for a new home, you might fall in love with a particular house. That’s when you need to begin your own research process. Aarthi Swaminathan described some increased risks home buyers face and explained how to get all the information you need before taking the plunge.
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How much further might this bull market run?
Following an 18.1% decline for the S&P 500 in 2022, the large-cap U.S. benchmark index returned 26.3% in 2023 and has returned 22.51% for 2024 through Thursday (all with dividends reinvested). How likely is the two-year bull market to extend in 2025? Joseph Adinolfi analyzed eight decades of market patterns to predict what lies ahead for 2025.
Bullish buzz:
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How about some controversy, backed by data?
Hannah Erin Lang crunched the numbers: Groceries are more affordable now than in 2019. So why are prices still such a hot-button issue?
First reaction: Sour on the robotaxi
Shares of Tesla Inc. TSLA were down more than 8% Friday morning after CEO Elon Musk rolled out the electric-vehicle company’s new Cybercab, which has no steering wheel or pedals. Musk said he expected Tesla to produce mass volumes of the robotaxi “before 2027.” He also showed off a prototype for the company’s Robovan, which he said would also be self-driving and would carry up to 20 passengers.
Despite being impressed with the new technology shown off by Musk, one analyst predicted a “sell the news” reaction for Tesla’s stock. Another criticized Tesla for not providing enough detail about its new business model centered on self-driving vehicles. These comments and more were rounded up in the Ratings Game column.
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These stocks can soar as interest rates decline
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Two broad themes for ETFs
In this week’s ETF Wrap newsletter, Christine Idzelis reported on how price action for exchange-traded funds holding bonds might underscore a change of opinion among investors on the Federal Reserve’s policy for interest rates. She also looked into a rapidly growing segment of the industry — actively managed ETFs.
Blunt but fair — the Moneyist
Quentin Fottrell — the Moneyist — answers more questions from readers about money and family relationships:
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