105 - What Q1 Earnings Really Say About 2025 - Don’t Trust the Hype

As Q1 earnings wrap up, we’re diving deep into what the data is actually telling us about where the economy — and the stock market — are headed next.

✔ 78% of S&P 500 companies beat earnings
✔ EPS growth is up 13.4% YOY
✔ But company guidance is barely trickling in
✔ Consumer sentiment just hit its second worst score ever
✔ And tariffs might not be fully priced into inflation yet

We break down sector-by-sector growth, expert forecasts for 2025 and 2026, and explain why the numbers might not match the mood. Is the market set to roar... or are we all just whistling past the graveyard?

Whether you’re positioning for the second half of 2025 or trying to cut through the hype, this episode gives you the real story behind the data.

🔍 Topics Covered:

• EPS and revenue growth trends
• Sector winners and losers for Q2 and beyond
• Why most companies aren’t giving guidance
• Consumer sentiment collapse
• Tariff effects on future inflation
• What rising P/E ratios could mean for your returns

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**DISCLAIMER**
Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

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Transcript

Welcome to roaming returns a podcast about generating a passive income with dividend stocks so you can secure your finances and liberate your life. 

Earnings reports are in and the numbers look good. But are they telling the whole story? In this episode, we dig into what Q1’s earnings are really revealing about the economy, where growth is hiding, and why expert projections might be dangerously optimistic. With consumers pulling back, inflation lingering, and companies too spooked to give guidance, are we heading into a storm… or just being fed hopium? Let’s break it all down.

All right. As we promised last week, we're going to go over what Tim is seeing in the macro trends, micro trends. Oh, hello, all.
From the... Hi, YouTube. ...earnings report season. A lot of good information? You don't think so? I mean, it's good information to have, but the information is kind of contradictory, so... Well, that's one of the big things we're going to talk about, because who do you follow? Who do you believe, right? Right.
So, two things of housekeeping beforehand. First, we both got COVID, so yay us, so that's why we sound like... I sound like a person that's been smoking for 45 years. Actually, you don't sound as bad as you did the last couple of days.
It's funny when you get to the tail end of sickness, where your voice gets really screwed up, and Tim has a really deep voice to begin with, and he went, like, ultra mafioso. It's funny with me, because I sound like a freaking little cartoon character person. And point two, I have one day left of the cleanse, and then... So are you committing to just one day? Yeah, just one more day.
Oh! That'll be 28 days of hell. 28 days. I'm so proud of him.
It is what it is. You beat me by a landslide. That was the goal.
I know. I know that was the goal. Okay.
So anyway, quarters, the earnings reports are about done for quarter one. When I got the information, I got it through Net-something-another. I forget what it's called.
We'll put it in the show notes, where you can actually go look for your own earnings report, a summary for the entire S&P. At the time I typed this up, it was 90% of the S&P 500 companies had reported their Q1 earnings. 95%? 90%.
Why did I think you said five? I don't know. Because I said S&P 500. Oh, maybe.
Yeah. My brain did a weird smashy. Smush.
And just like a conglomerate, 78% had reported EPS higher than was expected by the experts, which was above both the five-year and the 10-year averages. And 62%, which is actually well below the five-year and 10-year average, had reported revenue numbers higher than expected. So like the... That's kind of good though, isn't it? So what the earnings thing... If you tabulate it all together, they were beating on the EPS, which is like earnings per share growth.
But there was more companies that were not getting the revenue that was anticipated. So the revenues are actually down compared to normal. So normally it's like in the 70% range, that 73%, I think, when the revenue beats.
So the fact that there was that many less than normal is kind of... How does EPS go up, but revenue go down? Because they do accounting tricks in sleight of hand for the earnings per share. So if they were actually doing it accurately, it should actually mimic? Well, I mean, like if you think like for REITs, for example, like REITs, they'll take out like the... REITs are a different animal though. But I'm saying like, I'm just showing you how the earnings per share could actually go up.
REITs will actually do like the amortization and the rent increases, but the rent increases won't actually reflect in the revenue, the earnings. So the earnings per share could actually go up, but the revenue could actually go down. And that's what happened a lot.
So it's like... Fancy accounting. Fancy accounting. So the earnings per share is just how much money they brought in per share, whereas revenue is actually what they generated.
What they're actually generating is less than normal. And what they're actually getting per share is, well, that's not even accurate either because earnings per share is something that the analyst, they just project like, oh, this company is going to have like 26 cents. Right? That's what I'm saying.
26 cents per share. And so if they're beating that, that doesn't necessarily mean... It depends if you're looking at the EPS current or the EPS forward, right? Or is that PE? It's PE. Earnings per share is something that they like... The analysts come in and say, well, this company is going to make 20 cents per share when they get 24 cents per share.
It actually is an earnings beat, so it counts in the 78, but it actually could be a decline because they could have had 28 cents last quarter. And keep in mind, we just said the experts, the analysts, right? That's a foreshadowing for later? The other big number that I was able to get out of all this information, and it's a lot, so this is going to be... Dry, but this is really good information to have. A lot of stuff.
Earnings growth for quarter one of 2025 is at currently at 13.4% year over year compared to quarter one of 2024. So that means the earnings from 2024 is 13% less than the earnings for 2025 if you add it all together across all 500 companies. And if you go into the sector level, eight of the 11 sectors have reported year over year growth in their earnings with healthcare, information technology, and communications and utilities reporting the highest growth.
Energy is the sector that was reporting the worst year over year earnings growth of the 11 sectors. And of all 11 sectors, only one sector actually had year over year revenue decline, and that was the industrial sector. So what this shows you is that 10 sectors out of 11 had revenue growth and one had revenue decline as an aggregate for all the companies inside each sector.
Revenue is the incoming without any of the deductions taken into account, right? Yes. Okay. Just money they bring in.
So that doesn't incorporate anything with tariff crap? The tariffs are not reflected in these earnings. At all? No. Is it because they were... It's the quarter before, right? Yeah, this was... Ended in December and January.
Okay, I was going to ask about that. So basically, when we do this next quarter, that'll be a big indicator of what the heck changes. Well, you're going to see the huge discrepancy between, like if you just remember that we had a 13.4% year over year, or quarter one to quarter one.
What they're actually projecting for quarter two is only a 5.2% earnings growth. Whoa. So that's like... Less than half.
7.4% earnings growth in quarter three and a 6.7% earnings growth in quarter four. So they're expecting a huge drop off in quarter two while everyone gets recalibrated to the tariffs and the financial and foreign policies of the administration. And then once they... It's like they're going to bottom out and then they're going to kind of gradually peter around the rest of the year in quarter three and quarter four.
But nothing like the 13.4% they just had. So I imagine that'll be a thing of the past until this... What do they call it? Policy crap gets sorted out? Economic policy? Yes? Is that the right word? It's going to take a while to sort it out, yeah. The tariff policy is bad, the getting rid of people's jobs is bad, the consumer sentiment is bad.
Everything is just bad right now, so it's going to be reflected for the rest of the year. It makes sense why everybody's panicking and the markets are all over super choppy. So for 2025, the experts are forecasting a 9.3% year-over-year EPS earnings growth over 2024.
And that actually differs from the quarterly ones we just had, like the 5.2, the 7.4 and the 6.7. That is for at the end of quarter two, they're expecting the earnings in quarter two to be 5.2% higher than the earnings in quarter two of 2024. And as an aggregate of the whole, for 2025, they're expecting a 9.3 year-over-year earnings growth, which is not necessarily good because we're already pretty high up that. So that's kind of signifying that there's going to be stagnant earnings for the rest of the year.
Interesting. It's a little bit of ups and downs. The experts are also forecasting a 4% earnings growth for quarter two of 2025, a 4.7% revenue growth for quarter three and a 5.2% revenue growth for quarter four, which those are all lower than the first quarter as well.
Again, you see the quarter two, it's going to go way down and then quarter three is going to kind of tick up. And then quarter four is going to tick up a little bit more. That's what I kind of expect, what's going to happen is the information we're getting right now is for the end of 2024, so it's pretty good.
All these stupid policies took effect, so everything's going to be like the market drop, but then the market dropping was actually predicting what's going to happen in quarter two with actual companies. Because remember, the market is an indicator of what people expect to happen, not what's actually happening. It's a forward-looking mechanism.
Yeah, because when people get news, they're not acting on the news per se, they're acting on what the news is going to implicate for future profit and whatnot shares for the businesses. And then for 2025 as a whole, the experts are forecasting a 4.9% year-over-year revenue growth over 2024. And then just as a way of comparison for 2026, the experts are forecasting a 13.5% EPS earnings growth and a 6.3% revenue year-over-year growth.
So they're forecasting 2026 to be much better than 2025. Isn't that kind of what you said in our beginning of the year podcast? It's pretty precise, almost verbatim what I said. First couple of words.
Do you have underground awareness? No, it's just common sense. Tariffs are not good. I don't know where in the world this whole mentality that tariffs are great for the consumers and the market came from.
I don't know. Yeah, and that's what's interesting. Like Tim doesn't necessarily have superpowers.
It's just he digs into the actual data, whereas it seems like most people just go cherry pick a couple of things. And it's like the numbers really do just paint the picture. And then again, like you said, common sense, if freaking just like supply and demand, if prices go up, demand goes down because people don't want to spend it.
Well, no, there's this idea that tariffs are actually affecting the country that the products are coming from. And that's not how they work. No matter how they want to spin it, no matter how they want to be rate like companies and individuals like when you when you impose a 10 or 20 or 30 percent tariff on a country, whenever a business imports from that company, you have that 10, 20, 30 percent is going to be taken by the government.
The government takes the tariff. So they're taking it right. Like as soon as it comes into the into the United States, they just take 30 percent.
Yeah. So that whatever, whatever all the goods are worth, they're just taking 30 percent and that goes straight to the government. So we I don't know if we've mentioned this on the podcast before, but essentially what the tariffs are doing is it's just basically a different way of taxing the people because the businesses pass that tariff down to the actual consumer and it goes straight to the government.
What business? I mean, the thing about, again, common sense, what business the government says, hey, we're going to make you pay 20 percent more to bring that in the country. What business is going to say, well, that's cool. Yeah.
Right. We'll keep our prices the same. Right.
Zero, zero businesses, no matter on there. And they keep you like just this weekend we had a berating social media post saying Walmart should eat the tariffs. Well, Walmart is not going to eat a 20 percent tariff and say, oh, just for like giggles.
Yeah. And if the big companies like that are doing, it's going to trickle down to everybody else. I understand the theory behind terrorists is if you have terrorists, that's going to make more companies want to come into America to establish factories that produce the goods because then they're saving 20 percent or 30 percent or 50 percent, whatever the tariff is on that.
But they're paying more labor. But like you have to think like to actually establish even in like the most ideal situation to establish a company to take like five to 10 years building the business. So for five to 10 years, they're going to be importing the same product.
Plus, they're going to be importing the goods to make the products or build their factories. So like, and that's even if and that's even if people want to work. So if people don't want to work, they're going to actually raise wages to entice people to come work.
It's going to be robots. So it's. Well, I was going to say, unless this is literally the whole reason they're doing this is to bring the army and what they're doing, like I said, the government takes the tariff.
So when the government takes the tariff, they're actually it's a way of without them saying what they're doing. It's a way for them to lower the national deficit is by just charging ridiculous amounts of money. And then they just take that money.
They put it in the federal kitty and the federal kitty will actually pay the debt down. And it's a way to actually manipulate the two year and the five year and the 10 year and the one year treasury bonds to get to whatever rate they want them to be. So like it's a manipulation.
Oh, is this how to get around Powell's interest rate thing? Well, not around interest rates, but it's around the treasury rate. Yeah. But isn't that correlated to the interest rates? No, interest rates are different.
Treasury rates like. So that's actually independent. Yeah.
Oh, I didn't realize that. Mind blown a little bit there. So like it's a way to actually force the government to pay down some of the debt.
So I understand like part of wanting to implement tariffs, but I don't understand and implement from a incorrect knowledge of what tariffs actually do and where the like what the expenses are for a tariff. So it's like the problems. So I'm not anti or pro, but I understand both sides.
I'm just saying like in realistic data, what's going to happen is it's going to raise prices because companies aren't going to eat the tariff. Yeah. And that's basic common sense.
And then. OK, so back to what we were talking about, like that's a tariff talk. That's sideways.
We can do a whole podcast on the tariff if you want at some point. But like where this all gets gray and fuzzy and kind of weird is generally whenever there's an earnings report, the company will say, here's what we sold last quarter. Here's what we made last quarter.
Here's what the earnings per share are. And here's what we think is going to happen in the next quarter. That's like every earnings report verbatim is they talk about what the previous quarter and then they give guidance for the next quarter.
As of now, only 75 companies have issued guidance for quarter two, which is only 17 percent of the companies that reported this far. Whoa. You mean that they actually have think they have a clue of what's going to happen? That's what that means? Yeah.
So they don't know what's going to happen in quarter two. Like generally like that number should be in the 80s to 90s. So you're saying the other... For there to be a company that doesn't issue guidance, what that generally does is it affects their stock price because they don't have confidence in what's going to happen in the next quarter.
Yeah. So they're just choosing not to comment. So their stock price gets penalized.
But because shit's crazy, like 83 percent of companies are like, we have no idea what's going to happen in quarter two. Now 55 percent of the companies or 261 of the reporting companies have issued guidance for the full year of 2025, but only 17 percent of that actually issue guidance for quarter two, which is like it's that's extremely rare. That doesn't happen generally.
So there are fewer are doing a more short term forecast. They're doing the like the long term. They're saying, well, what we're going to do in 2025, we kind of know we're going to do 2025, but we have no idea what's going to happen in quarter two.
Yeah. For the short term. So they're doing like that.
We know it's going to happen long term, but we have no idea what's going to happen short term. And that's because the economic uncertainty that's been feeding that overlord policies is causing them to be like, oh, we have no idea. Yeah.
It's feeding that uncertainty, fear of the consumers. Interesting. So of the companies that had the cojones to actually issue guidance for quarter two, 55 percent have actually issued negative numbers, which is unheard of.
Like generally, it's like five to 10 percent, 55, 41 percent of the companies have issued negative EPS guidance and 140, I'm sorry, 41 companies of the two have reported 261. It was more than that. It was like four hundred and eighty ish or something like that.
So 41 companies so far of the 90 percent that have reported have issued negative Q2 EPS guidance and 143 have issued negative 2025 EPS guidance. So like the companies that actually are issuing guidance are saying it's going to get bad. So that's something to keep in mind, because that like like I take company guidance issues with more credibility, credibility than what the analysts and experts are saying, because they got like subscriptions to sell and stocks to get people to buy into and shit like that.
And again, foreshadowing. We'll get to that commentary later. Like the actual companies, when the actual companies are forecasting their guidance, that's the people inside the company that know the nuts and bolts of the sector and of what they actually contribute to the sector.
And that's to me is more vital information. They have more like boots on the ground experiential standpoint. OK, so for the next 12 months, the companies themselves are they're expecting energy to see the largest increase of 22 percent.
But then the guidance is saying that the financials is going to be the smallest increase of all the sectors at six point four percent. And that actually makes sense because energy got so shit can that it's down so low that it has no choice but to go up. And financials being the smallest increase makes sense, too, because if there's people if the consumer has less money, they're not going to be able to spend as much.
And if they have less money, they're not going to be able to borrow as much. So it makes sense that the financials would be like the sector that's that's being seen to be the worst in the next 12 months. Yeah, for sure.
According to the companies themselves, in terms of EPS, the companies are projecting that health care at 43 percent growth, information technology at 17 percent growth and communications at 29 percent growth. Are they're going to have the best EPS numbers and then the next quarter, quarter two and the guidance for materials at negative three percent growth, energy at negative 13 percent growth and consumer staples at negative seven percent growth are supposed to have the worst EPS numbers, according to the companies themselves in quarter two. Now, the one that's kind of weird there is the consumer staples, because that's like what people need to live.
But like to have seven negative seven percent growth, that means the consumer is actually spending a lot less money. And that is like what most companies are suspecting, because they're already starting to see it like Wal-Mart and Amazon are already starting to see the consumer pull back and not spend as much. So like they're just following through and saying the consumer is not going to be spending as much as they normally do.
They're going to learn to live on less, which is a good thing, in my opinion. But in the world of stocks, it's not a good thing. But that's the 12 month projected, right? Yeah.
Which makes sense, because it's like, again, if they preemptively bought a whole bunch of stuff, they're going to be pulling back because they don't really need it. They're like, that's a whole lot of like corn and toilet paper they bought. They stocked up on corn.
Isn't corn like a or potatoes, potatoes like, where the hell? OK, Mexican. OK. Potatoes is what people stock up on.
I'm Mexican. I'm Mexican. We do corn.
I'll buy no Mexican. In terms of revenue for the rest of the year, they are expecting the health care industry to have 9% growth of the information technology sector to have 12% growth and the utility sector to have 10% growth. The reason utilities are going to grow so much is because everyone's going to be running their air conditioner and whatnot, and they're going to be drawing more power through the hot months into the cold months.
And AI is taking off. So I actually think I'm surprised that utilities isn't one of the ones they expect to do best in the earnings. Yeah.
Yes, growth. But I would think, again, AC people can't live without their AC unless they're projecting and know that it's not going to be a super hot year. I will say it's been mild so far going in.
Like last year, I think we went right into summer pretty freaking quick in May. It's been pretty cold. And then the sectors projected or not projected, but the sectors that the guidance from the company sees doing the worst is going to be energy at 1% growth for the rest of the year.
Consumer staples at 0.3% growth for the rest of the year, and industrials at negative 1% growth for the rest of the year. They're supposed to be the worst performing on the revenue side. Again, that makes sense if you think about how this all went down, industrials and materials and all those.
The reason they're going to be so bad next quarter is because everybody stocked up this quarter. Energy is generally, if you follow the cyclical pattern of energy, like the summer months are when energy is cheapest. But then there's like a battle going on in the energy sector right now because OPEC wants the prices to be dictated by them.
But the United States is producing so much oil and natural gas that OPEC doesn't really have a say. So they're just kind of being a-holes and saying, well, we're just going to keep producing what we're producing because you guys are overproducing. So there's like a battle going on between the Arab countries and America about the production of oil and natural gas.
So that's something to watch. That seems so stupid because it's like if we're using our own internal resources. We don't.
Like we actually, our biggest export is oil and natural gas. So what, we use OPEC's? No. And we sell our own? We use our own and then we sell our extras.
Did we do that all along? No. That's what I mean. We were originally buying off OPEC.
So that's why they're mad. They're like, well, you guys, for like 80 years, you were like, we made so much money off you and now you guys are like almost self-sufficient. Why would they be overproducing if we're not actually buying from them anymore? I imagine we were one of the biggest consumers.
Because they have to like. Are they trying to out-competitor us to the people we're outsourcing to? My guess would be that they're hoping that if they saturate the market with too much oil and natural gas, a lot of American companies will go under because they won't be getting the, they won't like, they rely on natural gas being at such a price and oil being at such a price to make a profit. That's the dumbest thing I've ever heard because the way Trump thinks, he'd literally just stop out-exporting and stock up a freaking thing.
Wow. Oh my God. That sounds like OPEC's going to shoot themselves in the foot.
My guess is they're over-saturating the market to get rid of smaller companies. That doesn't even make sense. That's my guess, but I don't know.
That's funny. Big dick contest, huh? So the reason that this is important, like, so if you have an idea that say energy is supposed to have negative 13% EPS growth and it's only supposed to have 1% revenue growth, you can kind of make your plans according, like, hey, I want to invest in some oil companies because I think oil is undervalued, but like you have, knowing that the companies themselves are seeing the guidance to be that low, that means you have time to find the price that you want to get into the oil company that you want to, and like next week I'm probably going to go over like the dividend aristocrats, dividend kings, dividend contenders and shit like that again to pick out the best ones that fit in the world, like the sectors that they're projecting to do poorly so that we actually have a good idea where we're going to. To reallocate our portfolio or set ourselves up to profit.
That's a really smart move. Yeah. Get on that.
Sometimes I'm smart. Yeah. The cleanse is doing wonders.
In terms of the quarter two guidance, the sectors projected to do the worst as the, again, to remind you, companies themselves are projecting this. They're projecting the materials, consumer discretionary, industrials and financials to do the worst in the quarter two, and they're projecting communications, information technology and consumer staples to do the best in quarter two, which is. Contradictive of the year.
Contradictive to the rest of the year, but. So that's kind of interesting. So I'm guessing people are still stocking up on stuff, but they're going to eventually have that stock.
We're going to run out of money at some point in the next quarter where they're not going to be able to actually buy the consumer staples and they're going to have to take on debt and all hell's going to break loose, but whatever. Now, if we go into quarter two, looking at what the experts or our analysts are projecting, they're actually projecting the communication sector to have a 30% earnings per share growth, the information technology sector to have a 16% earnings per share growth, and the healthcare to have a 6% earnings per share growth. So they're the sectors they're projecting to do the best in quarter two, which is technology, technology, and old people. I'm just like, I'm shocked that healthcare is not like on the list for like the next five years in every quarter, because everyone's getting older and they're getting more medical and more hospitals and everything.
Well, they're like crazy stuff that's going around, like my God. But that's just my opinion. Energy at negative 24% earnings per share growth, consumer discretionary at negative 4% earnings per share growth, and materials at negative 3% earnings per share growth are the three sectors that they're projecting, that the experts project to do the worst in quarter two.
Again, earnings per share growth differs from revenue growth. Earnings per share is just like after all the accounting tricks and trades are done, they take what they have left divided by the total number of shares to come up with an earnings per share. Revenue is where they just take in the money and they say, this is how much money we made.
Those numbers don't look too off. As when it comes to revenue, the experts are projecting information technology to have an 11% revenue growth, healthcare to have an 8% revenue growth, and communication to have a 7% revenue growth. That's what they're projecting for quarter two as the best sectors.
The worst sectors are energy at negative 10% revenue growth, materials at 1% revenue growth, and consumer staples at 2% revenue growth. Those are the three worst sectors that they're projecting for quarter two. They kind of agree, IT, healthcare, and communications, communications, IT, and healthcare, and then we have consumer discretionary materials and energy, and then we have energy, consumer staples, and materials.
The only difference is consumer staples being the lower of the two consumer categories. You have consumer staples, which are the necessities, and consumer discretionary, which is the non-necessities like TVs and computers and shit like that. For the remainder of 2025, these experts also are forecasting that IT will have 18% earnings growth for the remainder of 2025.
The healthcare sector will have 16% earnings per growth, and communications will have 15% earnings per growth. That will be the best sectors, but if you scroll back up to the ... No, back to the very ... We just talked about communications. They're expecting 30% earnings per growth, and they're only expecting 15% for the rest of the year.
That's weird. IT, they're expecting 16% earnings per growth, and it's only supposed to have 11% revenue growth for the rest of the year, and healthcare is supposed to have 6% growth in quarter two, and then it's supposed to have 16% growth for the rest of the year. That's like ... Do you understand what I'm saying? These numbers aren't like ... Communications is half of what- These experts seem like they're even contradicting themselves with what they're putting out.
What that means to me is they expect quarter two to be good, then quarter three is going to be down, and quarter four is going to be down quarter for the earnings per share. But they're not coming out directly and saying that. It's not ... It's crazy.
When they try to forecast the remainder of the year, that's why I think we're going to start doing these every quarter, because when they try to project, it doesn't make sense. This shit doesn't make sense. We're expecting communications to do 30% better in quarter two, and we're expecting communications to do 15% better for the rest of the year, so that means it's going to do negative 15 in quarter three and quarter four.
Yeah. That's pretty much what that means, basic math. That's that.
They are projecting energy to be negative 12% EPS growth, consumer staples to be 0.3% earnings per share growth, and consumer discretionary to be 1% earnings per share growth for the rest of the 2025, as those are the three worst performing sectors they're projecting. The numbers, I'd like ... If you're going to use the experts, don't pay attention to the numbers. Just look at the sectors.
If that's what ... If they're projecting energy to be the worst performing one, then again, you can actually tailor your investing plan to invest in energy on your own terms in whatever company you want to. But does that correlate with the actual companies from the sector perspective? It doesn't. So there's where the big red flag is.
That's why I said, if you listen to the experts, that's why I said that. If you're choosing to put them as higher priority of what they know what they're talking about, which we do not. When it comes to revenue growth, they're expecting the information technology sector to increase revenue by 12% for the rest of 2025.
Healthcare 7% revenue growth for the rest of 2025, and communications 7% revenue growth for the rest of 2025. Those are the best three sectors they have pinpointed. That fits with their IT, healthcare, and communications with their EPS, so I mean, that's something.
Energy negative 3% revenue growth. Consumer staples 3% revenue growth, and consumer discretionary 3% revenue growth. They're forecasting them to be the worst sectors when it comes to revenue.
So then again, whenever you do your metrics, if you use earnings per share more so than the revenue and the revenue growth, then you probably want to pay attention to the earnings per share portion of the earnings summary of all the S&P 500 companies. If you use revenue, to me, revenue isn't tainted, whereas earnings per share is. So I lean towards revenue more, the revenue side more than the EPS side.
I'd rather have the raw data. But I use them both. Valid.
What I found interesting about going through this big ass report was that when I'm looking at the remainder of 2025, the experts only project one sector, energy, to have negative EPS and or revenue growth. They only literally have energy having a negative EPS growth. Other than that, they expect everything to go up.
So that doesn't make sense to me how the communications sector can have a 30% earnings per share growth in quarter two and then only have 15% earnings per share growth for quarter two, three, and four for the rest of 2025 when they're expecting the markets to go up. Basically, that's what that says. If they expect 10 out of 11 sectors to have positive EPS growth and 11 out of 11 sectors to have positive revenue growth, that means the markets should go up.
Just saying. That says to me that the experts are underestimating the tariff chaos or they're underestimating that the consumers will spend no matter what. I do believe that the experts foresee that consumers have always spent, so they're always going to spend.
But in our recent memory, we had COVID when the consumer didn't spend. And we had the 2008 financial crisis when the consumer didn't spend. So I don't know why they're so optimistic that the consumer is going to spend through a potential recession.
That doesn't even make any sense. And where I see a huge disconnect is if you follow the email, you're going to get this information this Friday. The consumer sentiment survey for May just dropped from the University of Michigan.
It's the second worst number on record that it's ever registered. The second worst. On record.
Only one time has it been worse. Consumers are worried about tariffs. Consumers are worried about inflation.
When they surveyed the consumers, they expect the inflation to reach 7.5% before the end of the year at some point. And it's currently at like 2.3 to 2.8, depending on which metric you look at. And this has caused the sentiment in the survey to drop over 30% since the beginning of 2025.
The consumer sentiment about the market and the economics going on is plummeting. So I don't know why the experts foresee such a positive second half of the year when it comes to the market. Consumers terrified.
Yeah. I think that sums it up pretty freaking well based on all those numbers, all that data and like talking to people and just watching the chop of the market. Well, I get a sneaking suspicion from the emails that I get and like the people I subscribe to that they seem to think that like they have repeatedly through like the last 20 years, consumers are going to save the market in 2025.
But if the consumer is terrified and they don't want to spend money like to buy, I don't know, Coke, why the hell would they invest in stocks? Yeah, they're not going to invest in the uncertainty component. Because again, if Trump wasn't doing what Trump's doing, I could maybe see that being plausible. But the fact that he keeps changing what he's even talking about, that is just like heightened the uncertainty past all recognition for anybody with half a brain.
Right. So like that's like there's a huge disconnect going on right now. Like so you have to determine what side you're on.
Are you on the side of the consumers are terrified? So everybody's going to be a lot more conservative when it comes to spending money and that includes investing money. If that's the case, then I would play the market for the remainder of 2025 kind of close to the vest invested in dividend growers, dividend stocks, not risky growth stocks because those will be at a deal at some point. They'll be hit the hardest if this thing does go sideways.
If you think the consumer is going to save the market, well then you're on the side of the experts where you think the market's going to go up substantially the rest of the year. Then you would just invest like you normally do with the growth stocks and then sprinkle in some of the dividend investment stocks. I've actually heard a couple of places and my brother was even talking about how that seems to be the prediction of whatever that the market's going to like crest or blow past all-time highs in the next several months and it's like, unless something dramatically changes, I don't know how that's possible.
Where's the money coming from? Because what's the debt thing for people? They're putting so much money on credit cards. Where's the money coming from? Yeah, the debt's increased by like – I think the people that went from financial – what's the word like when you don't own a lot of debt? It's not financial independence but they're financially stable. The percentage of people that went from financially stable to financially unstable with high levels of debt actually increased like 50% in the last year.
Yeah, that's scary. So where the hell would that money come from? I don't know. There's a lot of like conflicting pieces of information in there.
That to me is a red flag. There's a lot of red flags. That's why we kind of like just do our thing and get our dividend stocks and our weekly – But yeah, the reason the dividend growers is a good move if you're going to go that route is because they're like the more established companies and they'll basically keep growing their – Well, if you listen to all the podcasts, you know that I really like dividend growers for a retirement account because they have an established company with established moats if you need to like go listen to the economic moat podcast.
It's actually informative. Like Coke and Pepsi have a moat around like all the drinks. I mean they don't have like a moat individually.
It's like a Coke and Pepsi. They own but they're good stocks, consumer staple stocks that have moats around all their competitors. So like Triple M is one of them.
Triple M is another one they own. They own like so many patents and so they have so many different things for sale that their moat is huge. Amazon has a huge moat.
So you invest in dividend growers with economic moats in times like uncertainty like this in a retirement account. That's why like the retirement account has like when we go over the figures for the retirement account which is coming up soon, you'll see that that account has similar – It has some of the same investments but then it has like probably a third of the investments that we don't have in the van life portfolio and that's because those are like economic growers. I'm sorry, dividend growers that have moats and they're perfect for a retirement account because they have the economic blueprint to survive anything and they have the money to grow their dividend because they're not – Their payout rate is like 25%, 28%, 30%.
They're going to be the portfolio principle, keeping that as close to your datum point as possible versus like the other stocks that are more volatile in the down recession. So what I see from looking through the earnings reports and then seeing like all the other data I bring in like the inflation reports and the unemployment reports and the consumer sentiment surveys and the CEOs and COO surveys they bring up, I see a period of probably six months to maybe a year of uncertainty and uncertainty is not good for the market because you're going to have volatile days in the market where like it will go up 2% because there was some banging news and then you'll have a day where the market goes down like 4% because like the uncertainty creates chaos and you can make a lot of money if you do the day trading with the chaos, but like we're not doing that. We want to pick up things at the right price and that's why it's important as ever to make sure your metrics and your valuation methods are good so that you can get good companies at the right price because what we've learned from COVID was I was getting like a triple M at like $80 and I was getting other companies like Pepsi and I got like AB and I got Arbor which is a really good read.
I got all these at like really ridiculously low prices. That's where we got Trinity at like $8 and we've literally held Trinity for like ever now and it just keeps going up to like 12 and then it goes down to 11 and then it goes down to like 10.50, but it doesn't matter because I got it at $8 so it can do whatever the hell it wants. So like whenever you get a good investment or even like it doesn't even have to be a great investment, one that has like a super high yield when you get it at the right price, you can withstand the uncertainty because it doesn't matter at that point because your entry price is below where it's going to be like at any point in the next 10 years.
Yup and that's what we talk about when we talk about that margin of safety. You buy in when everybody's fearful and actually these volatile times is the best time for those sales. Everybody else is panicking about whatever and not wanting to get in the market and we're just like deal after deal after deal.
We're probably the people that the experts think of when they think of like the consumer is going to save the market because I have no problem buying now because pretty much everything is on sale. But generally. I would say it's the hedge funds.
Generally speaking, the normal investors aren't like us. No. Normal investors buy high, sell low.
They're not like, oh my God, that just lost like 30% last month. I must have that. That's not what the normal investor thinks.
Normal investor thinks I'm not. Oh my God, that's another Enron. I need to get out now.
I'm not putting my money anywhere close to that. Right. I invested money that's for my marriage or my wedding in two months.
I need to get it out now. You dig in and you do the research and you have the proper metrics. You'll have no problem buying something when it's like 40% undervalued.
No matter what the market's doing. It could go down. Who cares? Yeah.
And you see us doing that time and time again. Anyway, as for 2026, they actually have a couple blurbs about 2026. They're forecasting out beyond like 12 months.
Not sure why. The experts are projecting that energy is going to increase 22% in earnings per share growth in 2026 from the 2025 number. So 22% year over year.
Materials they see increasing 17% earnings per share year over year. And information technology they see increasing 16% earnings per share year over year. Those are the three.
They're right at this moment in time. Those are the three sectors. They see doing the best year over year in 2026.
Energy materials and I.T. I just realized I.T. stands for information technology. I can't love you anymore. I was like when I realized the quarters caught a quarter because it's a quarter of a dollar.
Oh my God. I love when weird stuff like that happens. The three sectors that the experts see doing the worst year over year in 2026 are real estate at 7% earnings per share growth.
Consumer staples at 8% earnings per share growth and utilities at 8% earnings per share growth. So those are what they're projecting right now to be the three worst performing year over year sectors in 2026. When you switch it to the revenue side, the experts see information technology at 11% revenue growth year over year.
Communications 8% revenue growth year over year and real estate 7% year over year revenue growth. So like there's a huge disparity. They're seeing it to be the worst performing earnings per share sector but they're seeing it to be one of the best revenue growth year over year.
So that's something to keep an eye on because that's crazy. Yeah, WTF. Those are the three best sectors, I.T., communications, real estate when it comes to revenue and the three worst they're projecting for 2026 is energy with a 4% revenue growth year over year.
Consumer staples 4% revenue growth year over year and utilities 5% revenue growth year over year. Those are the three they're projecting to do the worst in 2026 year over year. Maybe I did know what I.T. meant.
I just didn't like consciously awareness of it. Does that make sense? So that stuff like that's just to get your – to wet your whistle to thinking when it gets towards the end of the year like where do you want to like start planting seeds for 2026. You can start investing in like real estate companies now because they're getting shit on.
Wet your whistle. Wet your whistle. Really? Yeah.
As for the market as a whole, the experts are projecting the price to earnings ratio to remain highly elevated. It's currently above its five-year and its 10-year average and their projections are for the forward-looking price to earnings ratio to remain above its five-year and its 10-year averages. What that means is people think the market is overvalued now.
That just means that they're projecting it to stay overvalued going forward. Additionally, the experts are predicting the S&P to rise 15.4% over the next 12 months. Again, that's like I said, there's a disconnect.
They're expecting the market to go up 15% which would take us back above our all-time highs. But the consumers are terrified so I don't know. I can see it happening so be prepared but at the same time, I could see it going down another 15%.
How much are we down for the year-ish? S&P just got back to where it was in January. Oh, okay. So we're back to breaking even.
So we'll be up 15%. NASDAQ is still down a little bit. If that's accurate.
The Russell is still down a little bit, small caps. But I think that's a low probability unless something drastic changes. And if you tabulate, if you take all 500 companies in the S&P and you just add them all together, you get the EPS growth for all 500 companies was 13.4% for quarter one year-over-year and its revenue was a 4.8% revenue growth for quarter one year-over-year.
For quarter two, the S&P is projected to have a 5.2%. So that's a huge drop-off. 5.2% EPS growth and a 4% revenue growth. Again, both those are pretty big drops from where we are in quarter one.
And for the rest of 2025, the S&P is projected to have a 9.3% EPS growth and a 4.9. So it's going to kind of level back out. So like revenue growth, so like it's going to level back out, but quarter two is going to be a shit show. That's one thing I can agree with all the data that quarter two is going to be a shit show.
Everyone is expecting everything to be sunshine and rainbows in quarter two and that's just not what any of the experts or the companies are projecting. I mean, we're already like a month and a half into Q2 from our own personal experience. I don't... Q2, being a month into it, it's been pretty good.
The market's going up a lot. Because every time there's something said, oh, we reached a trade up agreement with China that we're only going to charge each other 30% instead of 140%. That's still a 30% increase in costs.
They do that anchoring bias thing where they like throw out a huge number and then they're like, oh, what's that over 30? This trade agreement that where it's 30% is still a dog shit. But the market perceived that as, okay, well, the EPSs will go up and the revenue will go up even though that's not the case. It just means that the EPSs are not going to decline as much as they would have had it stayed at 140%.
And the revenue is not going to decline as much as it would have had it stayed at 140%. So like I said, I think there's a disconnect right now where the market's at and what's actually going on. Anyway, for 2026, the S&P is projected to have 13.5% EPS growth and 6.3% revenue growth year over year.
So next year is supposed to be basically the average. That's kind of like what the average is, 13.5 and 6 to 7% revenue growth. So we just have to get through quarter two, see where we're at.
I have a sneaking suspicion quarter two is going to be a shit show, then quarter three is going to be a shit show, and then quarter four is going to be good. That's my suspicion is quarter two, we're going to go down and then quarter three, the beginning of quarter three, we're going to go really down because the data from quarter two is going to sink in. And then quarter three will go really down and then kind of go sideways and quarter four will go up.
So it would kind of look like 2023 or 2022, I forget what year it was, where it was down, down, down, down, down throughout the summer and the fall, just kept going down. And then Thanksgiving to Christmas, it just shot straight up. I think it's going to be one of those years where we go down, down, down, down, down, down, and then we just shoot up at the end of the year.
That's what I think is going to happen. I don't know what the down is going to be. I don't see a 15.4% rise over the next 12 months.
Again, unless something drastically changes. Maybe three to 5%, but that's my take on this, what I'm seeing when I'm looking at the earnings reports. I mean, so it's 3.5, three to 5% is still actually a decent rise, but it's nothing like the 15, that's a crazy number.
It is. To me. So that is earnings summarization of the 500 and the S&P 500.
The data. All the data you guys can go through, let's do it a couple of times if you need to, to get an idea of what sectors you should be looking at, what sectors you should be avoiding. So what are you seeing? Put this in semantical or layman's terms.
What I see right now is the analysts and experts are trying to paint a rosy picture so people stay in the market. The companies are saying quarter two is going to suck to the point where we can't even make a guess of what our guidance should be. That's the near term.
So the near term, quarter two is going to be just a huge wild card. The companies are saying, we don't know and we don't want to put our stuff out there giving out incorrect information because people sue and shit like that. For the rest of 2025, the companies, they're actually issuing guidance, but the guidance is more negative than positive.
So again, it kind of leads to the whole myth theory that quarter two is going to be down, quarter three is going to be down, and then the second half of quarter four, the market will go back up. So I think we're probably going to be about where we are right now at the end of the year. It's just going to be a roundabout way to get back up here.
So if we're going to have chop, this is a great time for dividend stock investing, right? Yes. Because you get the drip on, you're buying shares during this whole sideways chop nonsense. Right.
And if you don't feel comfortable investing right now, well then take the money that you would be investing and pay your debt down or do whatever you need to do and then set up an emergency fund or whatever you need to do because it's not going to be an ideal time for scaredy people to invest in the market. Scaredy people. Scaredy people.
And if you want security on your principal, look into worthy bonds again. They're still doing 7%. You don't lose your principal and you can access your money whenever the hell you want.
So basically just buffer your freaking emergency fund, your savings, and then wait for more certainty to come out. We will revisit this once quarter two comes in just to get a clearer picture for quarter three and quarter four moving forward. Like all I can say is like the companies are saying quarter two is not going to be good.
So do you trust the experts more or do you trust the companies more? Well, and here's the thing. We were just having a discussion last night about the experts and the analysts and stuff and we have a sneaky suspicion which we can probably... Lilith! Oh my, you are a grumble butt. Grumble, grumble.
Grumble butts. But we were having a discussion about how if there's this much disparity between the companies and the actual analysts and the experts, quote unquote, then how do we prove that or how can we like prove the theory that we have that they're kind of being sensationalists and they profit when people, they can sway people into whatever sentiment that they have because they can pre-plan their strategy and get the consumers to actually do what they want them to do, right, because that would benefit them. It always benefits them to paint whatever picture that they can paint to keep people in the market.
Yeah, and make money for themselves. So we couldn't actually prove this. So I told Tim what we need to do and I'm leaving a note here so I can remember when I come back and re-listen to this, that we should do this quarterly update and actually start tracking what the experts and analysts are saying, what the actual businesses are saying and do it over like, I don't know, four quarters, eight quarters, something like that, and then literally do a comparison plus reality checks, each marker.
So like looking back to see who was more accurate. Well, I'm just saying like, I'll pull up the same report at the end of quarter two and then I can say, well, here's what quarter two numbers are. Here's what they said in quarter one.
Were they right or were they wrong? But I think that's going to be fun. Okay. Then again, that's my idea of fun and apparently I'm a weirdo.
We'll start doing that to give you guys additional information, but like- The confidence you have in the stuff you're looking at and like getting rid of the stuff that really is irrelevant, that makes it easier for you to do what you need to do to invest, my opinion. And what I'm going to do, like I said, what I'm going to do next week is I'm going to take like these sectors that they're projecting to do pretty poorly and I'm going to find like the best dividend, like a dividend achievers, kings, aristocrats and things like that within each sector that you could dump money into. Yep.
They'll be safer. Adjusting the allocation proportions and all that fun stuff to basically prepare for what's to come. So that you have the best chance of actually like hedging against and profiting with the biggest value increases for what's to come.
And that's what we're constantly doing. We call that the churn factor. We're always moving our stuff to allocate for what we expect to happen.
And it's, I think it's set us up for great success with the whatever happened this year so far. Like even though we were down a lot in principle, our dividends- Yeah. Our dividends are pretty good.
You guys will see that here in a couple- Really, really good. A couple of weeks where our dividends are actually better off than they were last year at this time. So again, those are the metrics we look at and that's why we're not panicking.
So that's that. Next week will be, I guess, ticker parade. Ticker parade.
We should call it a ticker parade. I like that a lot. All right, guys.
Peace out. Have a good week.