US earnings powered ahead as the economy emerges from the ashes of the COVID-19 pandemic. Consensus is expecting US earnings growth of 48.1% this year, driven by 9.6% top-line growth and 4.3 % EBITDA margin expansion. Dylan Cheang, Strategist at DBS Bank, sees limited room for valuation multiple expansion this year and believes further upside for S&P 500 is set to be driven by earnings growth. “The strong set of results warrants the case for upward earnings revisions in coming months. At present, market consensus is expecting US earnings to grow 48.1% in 2021 – underpinned byTop-line revenue growth of 9.6% and EBITDA margin expansion of 4.3% to 21.3%. Given the strong earnings beat in 1Q21, we believe that further upgrades are on the cards. “There is strong likelihood that analysts’ earnings forecast for 2021 is skewed to the conservative side – for two reasons: (a) The consensus price target for S&P 500 is 4,130 and this level has already been breached, (b) The ratio for consensus price target over actual market prices for S&P 500 is below the long-term average. Given that consensus forecasts are currently not in the ‘exuberance’ stage, the likelihood of further upgrades is high as the economic recovery gathers pace.” “With the S&P 500 trading at 23x forward price-to-earnings (P/E), there is limited room for further multiple expansion this year. Instead, further upside for US equities has to be driven by earnings growth and the strong 1Q21 numbers augur well for the outlook.” Nick Note: I want to be crystal clear here. The stock market is behind the profit curve. It is way way undervaluing stocks. Not pricing in the all time record profits corporate America is booking AND FOR SURE not realizing never mind pricing in the profits to come. Now what you do is up to you. This is the greatest stock market trade ever. How can the markets and analysts price in what they have never seen before. Its not how they are trained to do. Lets face facts algoes and research look to the past to find parallels with present trading patterns. They use past market action to predict future price. Its impossible for them to comprehend never mind predict something that has never been seen before. And this war time peace recovery that has has no parallel. The reason is in this war nothing was lost. Other then the untimely death of a million mostly retirees their has been to tangible losses. Business literally has to simple call back their workers and flip on the lights. Companies are mean and lean… thats how they survived and the profits will flow directly to the bottom line. The masses are flush with cash and have a unbelievable need to spend their record savings……