Stories About Earnings, Margins & Multiples

Energy (OW) led the S&P 500 sectors last week, rising 7.3%. It is up 37.8% ytd, the best of all the sectors. Financials (OW) rose 0.9% and is on an 11-week winning streak. Health Care (OW) and Utilities (OW) also gained last week. Consumer Discretionary (UW) and Materials (OW) fell. Communication Services (MW) was down 1.0% for the week and is up just 1.2% ytd, the second worst of the 11 sectors.

Now, let’s look at recent developments in the Information Technology, Financials, Energy, and Communication Services sectors:

(1) Information Technology. The semiconductors trade rebounded this month. SanDisk is up 35.1% mtd, along with Marvell (18.4%) and Micron (18.1%), all well ahead of the Mag-7 (chart).

The y/y growth rates of the sector’s forward revenues and forward earnings continue to soar in record-high territory (chart).

So far this year, the sector’s gains have been driven by forward earnings, while the valuation multiple fell (chart).