S&P 500 Forecasts: Beware The Predictions

Wall Street analysts have been busy publishing their predictions for 2016 over the past four weeks. Analysts are now (December 31) in aggregate are projecting record-level S&P 500 EPS in 2016 of $126.94. 

However, according to a new report from FactSet Insight, based on historic trends, this forecast is likely to be 7.5% above the final reported figure for the year.

S&P 500 forecasts: Out by 7.5%

FactSet’s data shows that over the past 15 years the average difference between the bottom-up EPS estimate at the beginning of the year and the final EPS number for that same year has been +7.5%. Simply put, industry analysts on average have overestimated the final EPS number by...