Earnings Are What Ultimately Drive Stock Prices
Over time, earnings are what ultimately drive stock prices. The chart below shows the latest consensus 2011 and 2012 earnings forecasts (left axis) plotted against the S&P 500 (right axis). The earnings per share (EPS) estimates are “bottom-up” – the data comes from each of the 500 companies that comprise the S&P 500 index.
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