The image created from artificial intelligence
The profit estimates for the next 12 months are rising.
The profit estimates for the year 2025 and 2026 have decreased.
The above phrases appear to be in conflict. But they are in fact two Communication methods the The same information. Distinguished factor: the passage of time.
Calendar year for NTM profits estimates
We often hear analysts talk about profit estimates based on Calendar years. For example, Wall Street strategic experts presented this year Estimates 2025 profits.
Over time and information appears, Analysts will set these estimates. Historically, Analysts tend To gradually review These estimates are the year of evaluation. And until now, This was the case in 2025.
but, It can pass time quickly. With estimates of the evaluation year, discussion about future profits can become a discussion about previous profits.
For example, at the beginning of the year, profits 2025 are the profits of the next 12 months (NTM). But it is now April, which means any discussion about the profits of 2025 that involves an old quarter, and any discussion NTM profits It involves a quarter of 2026.
Michael Wilson of Morgan Stanley shared a gentle conception alongside this somewhat confusing dynamic. The left graph shows the NTM S&P 500 profits per share (EPS). Over time, you can see NTM EPS move up because it constantly includes high profits expected in future periods.
The graph on the right shows EPS estimates of 2025 and 2026 – fixed periods in time. Over time, you can see how analysts have decreased in recent months.
NTM’s profit estimates look good although the evaluation year estimates are decreased. (Source: Morgan Stanley)
“NTM EPS estimates are still advancing against the background of EPS, stronger 2026,” Wilson note. “However, NTM EPS may show signs of flattening in recent weeks as 2025/2026 estimates decline slightly less (-1 %).”
To clarify, both planners use the same authorities’ estimates of profits. It differs only in the way they reflect the effect of the passage of time.
The planning currently tells us that the promise of profit growth on a rolling future is more than compensation for the deteriorating expectations for fixed periods.
This is important In the context of evaluation measures like Prices forward (P/E) ratio. If the profits are expected to grow, then the future profits (e) will rise over time. This leads to a declining pressure on the ratios of P/E.
Be aware of this unconfirmed environment
like We discussed last weekThere are currently a lot of problems in analysts’ profits. Uncertainty is very highAnd there is evidence that Profit estimates There is now Ancient.
But again, each of the perceptions works on the same estimates. So if we believe that E estimates E have stopped, the discussions will be about both NTM and Calendar Year estimates likely.
The bottom line: Be aware of what you read and hear about profit estimates. Although it may be useful to know what is going on with reviews in certain evaluation years, information for a certain year will become less important over time. That is why it is more useful to look at NTM’s profits because stock prices are present It is strongly determined by expectations for the future.
Market news and data brought to you benzinga Apis
© 2025 benzinga.com. Benzinga does not provide investment advice. All rights reserved.
