Category Archives: Earnings Season

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

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

 

 

 

 

 

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

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

The Importance of Energy Companies to the US Economy

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

 

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

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

Light Friday … Thanks for Linking Accounts Vaulters ! Olympics

After a Monthly Video and a rather large mid-week Vault Sizzling post, we decided to be easy on your eyes ahead of the weekend.

Speaking of Sizzling Vaults… PAT YOURSELVES ON THE BACK.. Great work to all of those who linked accounts to their Vault.. WELL DONE !

We promised an earnings review last week that we will deliver next week. The delay has given us more ammunition toward our possible beliefs…. Good Stuff !!!

But that is next week and this is Friday .. Enjoy your weekend and Day !

Good Luck to all of the Olympic participants, looking forward to opening ceremony tonight!

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

Election Fall … Earnings Season Teaser … Summer Friday

As the conventions wrap up, the parties have “officially” nominated their person. The coming debates are expected to draw more eyes than ever before.

Here are the latest pollster odds …

 

Take your pick!

Earnings

We are heavy into earnings season and the results are trending better than analysts were predicting. Next week we have a busy, but informative chart that shows how regularly earnings start high at the beginning of the year and drop as the year passes….

Ahh…but that is next week… Today is a Wonderful …over-the-mid-point of summer…last business day of July ….Summer Friday!

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

 

British Open Elder Leader/Markets… Extended Travels Begin … Friday

With a 5 on the front part of the clock, it is neat to see Phil Michelson, a personal favorite, recently written off due to the 5 front number approaching in his age, now leading the British Open! … 46 is really not that old is it?

Speaking of elder statesmen, the large company US capital markets hit new highs this week, making them, historically speaking, one of the longest/oldest in history.

It is a good thing for both parties, they don’t just die of old age … good luck Phil … More about the markets to come (Had to know there would be a market/sports comparison in there somewhere! yaya market/sports nerds)

Extended Travels Commence

The annual extended travel/remote working begins next week. Fellow professionals, family, and friends visits are all in store. Thanks to technology “think time” and a “sharpening of the saw” occur without missing a beat from the office.

A multi-part special series on the New Vault is in store, as well a promised economic analysis, beginning of earnings season, and updates.

Ahhh…. but today is a Friday heading into another wonderful Summer Weekend … enjoy yours … and 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