Category Archives: Earnings Season

FactSet Earnings Estimates and Ratio Review – Part II in Market Valuation Series

Posted on February 10, 2021 by | Leave a comment

John Butters our friend at FactSet, (a treasure of information resource) released a 37 page report in timely fashion for our Valuation Series. We are especially fond of Butters who takes the time to personally email us the “ok” to reproduce portions of his report…thanks again John!

Recall our first in Valuation Series here, where we reviewed the Buffett back of the Napkin Valuation of GDP to S&P 500 Market Capitalization…. While maybe not flashing Bright Red, it was in never seen before high valuation territory…

FactSet Valuation Analysis

Here we are again showing a likely never before seen high chart value … Flashing bright Yellow or maybe Light Red. Way up high as printed is overvalued…

Unlike the prior charts, this one is GREAT going up…

This Chart is the Q1 2021 Earnings Expectations. In September of 2020 expectations were for a negative yes -13% year over year earnings… today barely positive, but positive!

Now here is the REAL GOOD news, Q 1 2020 was mostly unscathed by the lockdowns… meaning this is a very aggressive comparable to a more normal year, also meaning the following quarters will likely print huge positive growth numbers due to easier comparisons…

With a little luck, maybe we can grow into our larger than fitting/high valuation clothes over the year!

Lemonade out of Lemons … MAYBE, but bad things do not always have to happen…

Lots of risk, lot’s of things that could go bad, but again they do not HAVE to!

No time to swing for the fences — We NEVER do!

Have a Great “FactSet High Valuations but a Safe Way Out” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

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Posted in Earnings, Earnings Season, General Financial Planning, Investing/Financial Planning, Market Comments

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Earnings Estimates Coming Back … Slowly

Posted on September 28, 2020 by | Leave a comment

Earnings are the ultimate driver of stock prices …

Managers work VERY hard to estimate what they will earn and carefully deliver that information to Wall Street – Carefully because a disappointment leads to loss of trust, embarrassment, and likely a slammed stock price – Think of it as blowing your budget in a public forum …

Estimates Return – SLOWLY

A short personal story – long time followers know copyright is very important, so when using others material, we always ask for permission if it is not clear we can reproduce the material – John Butters the continuous author of this report personally took the time to email me back, thank me for the request to use his material and said of course – making us even happier and more frequent users of his material…. ok, slight digression …

For the second quarter, 53 S&P 500 companies issued quarterly EPS guidance, which was the lowest number of S&P 500 companies issuing EPS guidance for a quarter since FactSet began tracking this metric in 2006.

From our dear Friend John Butters at FactSet:

Managers being conservative and protecting their names, pulled estimates … actually not surprising due to the circumstances….

Slowly they are getting confident enough to put estimates out there…. good progress as the look through continues!

Have a Great “Earnings are coming back” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

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Posted in Earnings, Earnings Season, Market Comments

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Hold on … Here Come Important Valuation and Corporate Earnings Charts –

Posted on November 13, 2019 by | Leave a comment

As promised, it’s always good to step back occasionally and make darn sure we are not all being Lemurs (most known for following each other without thought) and gathering together, just before we go over the cliff….

Ok, so you are about to receive a blast of charts… we will code this post Forecast so we can go back and look at the “Forecasts” later….

Is the Market (S&P 500) Expensive?

This is the trailing PE (Price Earnings Ratio) the most macro valuation measure used from our Friends at Factset !

Green dotted line represents, 5 year average, and the dark dotted line represents the 10 year average….

Answer – Not cheap, but MAYBE not as frothy as it may feel at times (present party included) – certainly have been MUCH more expensive in the past…

Remember, tariff progress may release some pent up/held on the sidelines demand!

11-9-19 Trailing 5 and 10 year Avg PE Versus Current PE

What Areas are PROJECTED to Grow in 2020

This is what analysts are PROJECTING/Forecasting (hence our coding for future review) for the year 2020!

Recent Losers are expected to be next years winners- i.e. Energy and Materials….

What happens if Tariff Agreements are not reached? Not being negative here but we must consider this could be better or worse!

11-9-19 Earnings Growth for 2020 by Sector - Forecast

Earnings Versus Market Price Movement

You hear us say all the time, Earnings are the ultimate driver of prices… and they are….

No one says this is easy…. Earnings have been flat, but markets up….

Theoretically this should not happen … UNLESS market participants expect future earnings growth as markets are forward looking.

Q 4 2019 EPS Growth Change Versus market Growth

How about the Consumer?

Recall the consumer drives over two thirds of the economy through spending in our consumer consumption economy….

A Happy Consumer = Spending Consumer

One of the many Consumer Sentiment Indicators… University of Michigan…

Steady as she goes!

9-2019 U of Michigan Sentiment 10 years

Ok … you get the point, not too bad!

We could find something really hot and really cold, but these are the biggies from a high level!

Of course we did not forget the inverted yield curve and it’s recession predictiveness … we spoke about it here, here, here and here…. more to come…

Have a Great “Lemur Checkup” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

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Posted in Earnings, Earnings Season, Economy, Forecast, Investing/Financial Planning, Market Comments

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Three Views of the Consumer – Balance Sheet, Net Worth, Debt Service … Looking Good!

Posted on October 28, 2019 by | Leave a comment

Over the weekend… doing what Financial Nerds do, after actually looking for an earnings update from Factset, but only being about 40% through the earnings season and after reviewing an almost 100 page slide deck from JPMorgan, the following consumer related charts jumped out, so we decided to share

Three Views of the Consumer

Recall that the consumer makes up over two thirds of the US GPD/Economy/Economic Growth via his/her spending… one can infer a happy consumer is a spending consumer…

These are averages across the country, so there are certainly different individual cases, but this is definitely worth a look…

Here is the Consumer latest Balance Sheet

Liabilities are most interesting to us, especially the non-mortgage liabilities…

10-25-19 Consumer Balance sheet

Consumer Debt Service is at a very low and serviceable level

The Great Recession of 07-09 has had at least the one good long term effect of keeping the consumer debt service low… not sure if fear or regulation, but still low compared to this multi-decade Chart…

Worth noting this chart variance in NOT very large… very interesting ..

10-25-19 Household Debt Service

Consumer Net Worth

Appreciation of most financial assets post Great Recession 07-09 has cleared new higher ground for the consumer, adding to confidence, happiness and freedom of spending…

Ignore the value the numbers are too big to comprehend, just take note of the higher high in the far right…

10-25-19 Household Net Worth_Page_01

These numbers being so interesting, likely have spawned a deeper dive in our next Newsletter with additional facts and national averages that may make for a great New Years Resolution Article…

Have a Great “Updated Consumer” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

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Posted in Earnings Season, Economy, Investing/Financial Planning, Market Comments

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Bet you didn’t know we had a YouTube Channel – Vault and Other Video’s Coming Soon – Friday Tennis

Posted on July 20, 2018 by | Leave a comment

After a heavy week of Pension Benefit Options and a Super Heavy 90 day Treadmill/Earnings update… let’s slide into this hot weekend on easier ground…

Did you know we had a YouTube Channel?

Yep, we do – it’s out there and holds all of our Video’s from the very beginning. It also lets us easily embed the videos in other places!

JK YouTube Channel pic

Take a look, here or at the link at www.youtube.com/jkfinancialinc

Ok, so there is nothing edgy or slanted, but there is a tone of great information on it… take a look as see for yourself!

Here is our most popular Video EVER, for obvious reasons (its a few years old and wrong season, but we can always use a laugh)  …

 

Speaking of Videos ….

Vault and Financial Planning Video’s Coming Soon

Our Vault has undergone some updates – NICE – and we want to update a few of our current “How to Vault” videos (Six 1 minute Fun Video’s found here or on our Youtube Channel) as well as add to the details of several of our most popular posts.

The Vault Videos will stay at 1 … yes ONE minute – long time listeners and readers know that is really hard for me, but with such good feedback, we will keep it right there – if possible – haha!

Several of the more complicated items, such as Estate Planning Checklist and the Inverted Yield Curve series will make the cut as well.

Hope you enjoy in advance!

So it is a Friday … and that means you are headed into a Summer Weekend – Please enjoy and stay hydrated, which is what we will try to do with the 13 year old, as she play a tournament in a farther Southern Texas City, but it will still be HOT!

Don’t forget to spend time with those who are important in your life… it goes fast!

Talk to you next week!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

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Posted in Clients/Clients Only, Earnings Season, General Financial Planning, Investing/Financial Planning, Podcast, Vault, Video

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90 Day Treadmill aka Earnings Update and Neat 10 year Chart

Posted on July 18, 2018 by | Leave a comment

Earnings are the ultimate driver of capital markets.

Growth or the expectation of growth and markets will EVENTUALLY (patience may be needed at times) rise.

Contraction of earnings – think recession- markets will go down, no patience needed on this one, as markets frequently do not waste time in their contraction.

Earnings Update

We frequently quote our Friends at Factset as they do a fantastic job of reviewing every detail of earnings each 90 Day Treadmill/Quarter …. too much of course can lead to YAAAWN … we get it, but we have to keep an eye on this stuff even during Summer Doldrums-

Here is a latest update-

  • Earnings Scorecard: For Q2 2018 (with 5% of the companies in the S&P 500 reporting actual results for the quarter), 89% of S&P 500 companies have reported a positive EPS surprise and 85% have reported a positive sales surprise. 
  • Earnings Growth: For Q2 2018, the blended earnings growth rate for the S&P 500 is 19.9%. If 19.9% is the actual growth rate for the quarter, it will mark the second highest earnings growth since Q3 2010 (34.1%). 
  • Earnings Revisions: On June 30, the estimated earnings growth rate for Q2 2018 was 20.0%. Four sectors have lower growth rates today (compared to June 30) due to downward estimate revisions and negative earnings surprises. 
  • Earnings Guidance: For Q2 2018, 62 S&P 500 companies have issued negative EPS guidance and 47 S&P 500 companies have issued positive EPS guidance. 
  • Valuation: The forward 12-month P/E ratio for the S&P 500 is 16.6. This P/E ratio is above the 5-year average (16.2) and above the 10-year average (14.4).

Ok, so earnings are moving along pretty good as managers continue to navigate tax cuts and a frisky consumer.

Our theme of the year “Patience” is still in order – but take a look at this neat chart –

Neat 10 Year Review of Earnings and Market Movement

 

7-13-18 EPS Growth and Mkt Growth 10 year avg

There is a correlation in earnings and capital market growth- patience and fingers crossed for continued fantastic earnings growth!

Have a Great “Continued Positive Earnings” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

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Posted in Earnings, Earnings Season, Investing/Financial Planning, Market Comments

Earnings Review … aka 90 day Treadmill … Revenue the missing link, found?

Posted on August 7, 2017 by | Leave a comment

As mentioned Friday, earnings are the key drivers to asset growth and appreciation.  While we do not want to get into the weeds too much on this, continued growth bodes well for continued market appreciation… and maybe growth into the Frothy valuations.. From our fantastic friends at Factset.

Earnings Growth for the Immediate Quarter Looks Great

While a very short term time frame, (3-5 years is our normal time frame) this 90 day treadmill aka earning season chart shows the move upward in expected earnings growth rate. Continued movement at this rate would certainly help us grow into the current valuations.

 

8-4-17 Factset Earnings Growth Q217

Nice move!

EPS- Earnings Per Share

Ok, sure the EPS Earnings Per Share- solid line is moving down as time has passed for this quarter, BUT, the scale is very narrow and the amount of lowered expected EPS growth is only slightly less…

8-4-17 Factset Change in Q317 eps

Before looking too much into this, the lower line is a tiny move due to the frame size!

Revenue/Sales Growth FINALLY?

Be it the Great Recession lingering effects, demographics, economics, world growth or technological advances, Sales or Revenue has been missing during this economic recovery. In reviewing this chart, Energy, bouncing back from a much lower price just a year ago is making up much of the sales increase, however other sectors are chiming in too. Could this FINALLY be the sales increases we have all been waiting for? Compliments to all company managers for cutting expenses in order to maintain profitability, however there are only so many cuts that can be made. If sales increases continue, this would provide much needed breathing room for managers.

8-4-17 Factset Rev Growth 2017

Sales growth has been absent this recovery, making for HUGE challenges for corporate managers

 

Time will tell! So far its looking good!

Have a Great “Growth in Earnings” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
http://www.jkfinancialinc.com
http://www.street-cents.com

 

 

 

 

 

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Earnings, a key driver to Capital Markets/Asset Appreciation … Friday

Posted on August 4, 2017 by | Leave a comment

By a lot of metrics, capital markets may be frothy (our term), overvalued, or some even saying a “Bubble” (WAY over used in our opinion) ..
With a long term average of 15, a 24.6 Price to Earnings ratio (Prices divided by cumulative earnings of the capital market), the bluntest valuation instrument MAY be frothy.

BUT if earnings continue to grow, it would be logical for assets to at least maintain their levels and possibly even continue to appreciate, ESPECIALLY if the future looks bright!

Those steep declines represent a corresponding decline in asset prices… note this chart is going back to the 1800’s … we like long term views such as this…

Next week we will review the “here and now” of earnings and growth/sales  as we are in the middle of the 90 day treadmills we call earnings season….

Ahh… that is next week, today is Friday, enjoy your summer weekend !

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
http://www.jkfinancialinc.com
http://www.street-cents.com

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Posted in Earnings, Earnings Season, Investing/Financial Planning, Market Comments

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The Importance of Energy Companies to the US Economy

Posted on June 21, 2017 by | Leave a comment

Not so many quarters ago with oil booming and the price of oil going to $144/barrel many including ourselves may have missed the importance of Energy Companies on the US as well as global economy.

Here  we reiterated that we thought the trickle down effect may be much greater than many had once thought.

Another Great View from Visual Capitalist

Take a moment to let this chart digest…it truly is amazing.

If you have been following us long you know we love to mix different opinions especially when they point the same direction- this from Factset..

Without Energy, the S&P 500 earnings would be much less.

Before complaining about that fill up… remember these two items.

Have a Great “Energy Growth” day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

 

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Earnings, the key to Capital Market Growth … Let’s get an update?

Posted on May 22, 2017 by | Leave a comment

The ultimate driver of Capital Markets are Earnings. Yes, we can argue about interest rates, currencies, world political and economic cycles, but all of these events are only important in how they change earnings or the growth there of “Earnings”.

Let’s take a look at early statistics from 2017!

Earnings Via our Friends at Factset

This from Factset, one of our favorite data aggregators in their regular weekly report.

  • Earnings Growth: For Q1 2017, the blended earnings growth rate for the S&P 500 is 13.6%. If 13.6% is the actual growth rate for the quarter, it will mark the highest (year-over-year) earnings growth for the index since Q3 2011 (16.7%).

Looking closely at the following chart, which is TRAILING earnings, forward looking capital market expectations can be seen. The trailing earnings are actually falling over the last few years, but the forward expectations as noted from the first bullet above are expected to climb more rapidly than the past six years.

5-12-17 Factset EPS change and Price

 

So just where are these revenues that are creating accelerating growth coming from?

5-12-17 Factset Geographic Rev chart

P/E or the Price to Earnings is the most blunt way to measure the valuation of capital markets. A high P/E might mean markets are overvalued and need to grow into their valuations, or a reversion to the mean reset to a lower level may be in the cards.

5-12-17 Factset 12 PE ratio V long term

From Factset’s estimates above, the current market P/E is about 22 with a normal of 16-17, undoubtedly higher than normal but certainly no guarantee of an imminent reversion down to lower levels.

If the growth estimates mentioned in the very first bullet come through in 2017, much of this froth may be taken out of the capital markets.

Either way, we have your back via our good friend diversification!

There you have it, a nice ‘Earnings Update” … We will be watching closely!

Have a great “Earnings Update” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

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Posted in Earnings, Earnings Season, Economy, Interest Rates, Investing/Financial Planning, Market Comments, Political, World Political

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