Editor's Note: Below is a brief excerpt from this week's edition of Market Edges. Click here to learn more about Market Edges.
So far, 132 S&P 500 companies have reported year-over-year 1Q 2018 Sales and Earnings Growth of 10.1% and 25.0% respectively. It's early and we've been warning Market Edges subscribers about Wall Street's sky-high earnings expectations for the coming quarters and increasingly difficult comps.
Essentially, Wall Street's earnings estimates for the first quarter of 2018 are currently sitting at levels not seen in 7 years (16.5%). So far so good for hitting that first quarter number, but there's still a lot of time left.
Furthermore, estimates into the second, third and fourth quarter are equally high (19.7%, 20.9% and 18.0% respectively). That's a pretty high bar. Why? With tough comps and wage growth likely picking up in 2018, we think profit margins get squeezed from here. In other words, the peak in earnings growth is probably in.