2014 Predictions

As we begin a new year, it’s time for the various market predictions.  Analysts and markets strategists have made a number of projections for the S&P 500 for 2014.  Below is a summary of these projections and of recent historical trends in the data.

• Where will the market close in 2014? For 2014, industry analysts in aggregate see the index closing higher in 2014, while market strategists on average see the index closing lower by year-end.
• What is the projected EPS estimate for 2014? As of December 31, industry analysts in aggregate were projecting record-level EPS in 2014 of $119.80. However, they have overestimated the final EPS for the index on average over the past 15 years.
• Industry analysts ($119.80) and market strategists ($118.15) had similar EPS estimates for 2014 on December 31. This marks the smallest absolute spread between the EPS estimates in five years.
• Is the index overvalued? Based in the closing price and forward 12-month EPS estimate on December 31, the forward 12-month P/E for the index is 15.4. This P/E ratio is well above the 5-year and 10-year averages, but still below the 15-year average.
• In terms of earnings for the index, industry analysts project growth of 10.5% for 2014. All ten sectors are predicted to see earnings growth, led by the Consumer Discretionary, Materials and Telecom Services sectors.
• In terms of revenues for the index, industry analysts project growth of 4.0% for 2014. All ten sectors are predicted to see revenue growth, led by the Health Care, Consumer Discretionary, and Information Technology sectors.