Homrich & Berg says S&P 500 valuation hinges on consensus 27.8% earnings growth forecast
SPY•Homrich & Berg said the S&P 500 trades at 24.7 times trailing earnings and 19.2 times forward earnings, while consensus forecasts 27.8% earnings growth. The report warned that missing the forecast could trigger volatility or a pullback.
1. Valuation gap and forecasts
Homrich & Berg flagged a valuation split in US equities, with the S&P 500’s trailing-to-forward earnings multiple spread 2.2 standard deviations above its post-1995 average. The equal-weighted S&P 500 trades at 18.3 times trailing earnings and 16.1 times forward earnings, both below five-year averages; the Russell 2000 is 55.8% cheaper than the S&P 500 on forward sales despite a 12.5% year-to-date rally.
