S&P 500 Relative Value Cheat Sheet: Increasing S&P EPS forecast by 8ppt, less bullish on index level

Research evidence excerpt

S&P 500 Relative Value Cheat Sheet: Increasing S&P EPS forecast by 8ppt, less bullish on index level

Accessible version

S&P 500 Relative Value Cheat Sheet

Increasing S&P EPS forecast by 8ppt, less

bullish on index level

2026 S&P EPS: $335. Index still pricey on most metrics… 18 May 2026 Corrected

Since January, positive revisions to 2026 earnings have exceeded even our above Equity and Quant Strategy

consensus forecast of $310 (see Year Ahead), driven by strength in commodities and United States

TMT. Our new forecast implies 22% YoY growth but ex-TMT/Energy/Materials, growth is Savita Subramanian

closer to 7%. In tandem with fundamental strength, the S&P 500 surged to fresh highs. Equity & Quant Strategist

But other events since January–war with a limited sightline to resolution, high and sticky BofAS+1 646 855 3878

oil/gas prices for months, an insidious layoff cycle (more below) – keep us neutral to savita.subramanian@bofa.com

negative on the index (year-end S&P 500 price target = 7100.) Moreover, despite a jump Victoria Roloff

in earnings, the S&P 500 still trades expensive on 16 of 20 metrics we track (Exhibit 13). EquityBofAS & Quant Strategist

victoria.roloff@bofa.com

…but it’s now cheap on “PEG”, a contrarian indicator Alex Makedon

The S&P 500 is now trading below its historical average PE to Growth ratio after a hefty EquityBofAS & Quant Strategist

increase in consensus long-term growth expectations to +16% (higher then 2000’s, the alex.makedon@bofa.com

highest since 2021/22). But consensus long-term growth expectations, like other Nicholas Samoyedny, CFA

Equity & Quant Strategist

sentiment measures, have served as contrary indicators. Why? Growth is more likely to BofAS

disappoint than exceed lofty expectations.