Extreme Earnings Forecasts Mask Stock Market Risk

The growing reliance on ever-higher profit margin assumptions is having an increasing influence on expected earnings - and therefore on price-to-forward-earnings multiples. Based on earnings through the end of 2025, operating margins are just under 16%. They are projected to rise to nearly 19.5% in 2026 and to almost 21% by 2027. Market risk that was previously visible as a steep…