Struggles u.s: Policy Uncertainty and Goldman Sachs

struggles u.s: Challenges in growing revenue or sales for companies can sometimes mean problems converting that shrinking top-line revenue into bottom line profit growth, according to Market Watch. The S&P 500 index trades near fair value relative to interest rates, although we believe policy uncertainty and negative revisions to 2020 earnings-per-share forecasts will limit equity upside, wrote David Kostin, chief U.S. equity analyst at Goldman Sachs. Although S&P 500 SPX, 0.47% companies have so far beaten lowered expectations for earnings-per-share, or EPS, growth, only 28% of companies are surpassing revenue growth targets, a figure that underscores a slowing American economy and the struggles U.S. firms will have expanding earnings in the quarters ahead amid valuations for stocks widely viewed as lofty, according to a Monday research note published by Goldman Sachs. The stock market's downbeat response to negative earnings surprises and guidance validates the argument that lower interest rates may not lead to higher equity prices. The S&P 500 appears fairly valued relative to the index's elevated ROE, he wrote. Kostin recommends that investors use return-on-equity ROE a measure of determining performance by dividing net profit before any nonrecurring items by common shareholder equity total assets minus total liabilities as a framework for studying profits, noting that for the S&P 500, ROE has hit 18.9% during the first quarter of 2019, it is highest level since 1998. (news.financializer.com). As reported in the news.