For all the uncertainty and concerns the US-Iran-Israel war is causing for oil prices, interest rates, inflation, the global economy and equity prices, it seems US analysts are not concerned. In fact, the earnings picture for corporate America remains, perhaps surprisingly, intact — even improving.
Over the past three months, analysts have raised their projected earnings for the S&P 500 companies by 8%. Factset’s data as of March 26 shows the S&P 500 bottom-up analyst price target implies 28.9% upside with 8 of 11 sectors showing analysts raising price targets.
The damage to sentiment, however, is real and visible. As of yesterday’s close the tech-heavy Nasdaq has slipped firmly into correction territory, down more than 10% from its October peak. The Dow Jones and the S&P 500 are both flirting with the same threshold, teetering on the edge of a correction of their own. For investors who had grown accustomed to a relentless grind higher through much of 2024 and into early 2025, the pullback has been jarring.
But it is worth being precise about what is actually falling here. This is, at its core, a decline in investor sentiment — a compression of the premium that markets were willing to pay for future earnings — rather than a deterioration in the earnings estimates themselves. The S&P 500’s forward price-to-earnings multiple has retreated from its peak of over 23 times to just around 20 times. That is a meaningful re-rating, and it explains much of the index-level pain. Investors are paying less for each dollar of future profit, not because those profits are disappearing, but because uncertainty has a price.
And the profits, for now, are holding up remarkably well. The twelve-month forward EPS level sits at $330.49 — a figure that has risen steadily and with remarkable consistency since 2022, barely flinching in the face of the current turbulence. Full-year estimates for 2026 sit near $311, with 2027 already pencilled in above $365 and 2028 approaching $415.
The trajectory is not just high — it is accelerating. Twelve-month forward EPS growth is now running at over 17%, its strongest pace since 2020.
The sector-level picture is where things get genuinely interesting. Energy has seen the most dramatic upward revision this month, with its 12-month forward EPS growth estimate surging from around 2% at the start of March to above 7% by month’s end. That is the kind of move that reflects a rapid repricing of the commodity and geopolitical environment — energy, unsurprisingly, benefits from the sky high price of crude oil.
What is more striking, though, is the breadth of the revision cycle. All eleven S&P 500 sectors have registered positive earnings revisions over the course of this month. Every single one. Even Industrials — a sector burdened by capital intensity and interest rates — has come in flat to modestly higher.
The tension, then, is clear — and it cannot hold indefinitely. Markets are pricing in more fear. Earnings estimates are pricing in more growth. These two realities are pulling in opposite directions, and the rope between them is fraying. Something will have to give.
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