Homrich & Berg says high yields leave S&P 500 most vulnerable to earnings misses

• Homrich & Berg flagged earnings downside as the key near-term risk for US equities as surging Treasury yields compress S&P 500 multiples.
• Its valuation model implied a 19x S&P 500 P/E, matching the 19x forward multiple, well below the 24.4x trailing P/E.
• Model inputs included a 4.83% 2-year yield, 48 bps 10-year minus 2-year spread, 1.46% BAA spread, 21.4% consensus EPS growth.
• At current rates, 10%-15% EPS growth implies a 14.5x-16.2x multiple; 0% growth implies about 12x.
• Nearly 24% EPS growth over the next year could lift P/E to 21.1x-24.8x; its model forecast sits below 27.8% consensus.

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