Tag Archives: 90 Day Treadmill

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

 

 

 

 

 

And they are off … Earnings Season that is, AKA 90 day Treadmill

Earnings are the ultimate driver of stock prices. Yaa yaa, the Federal Reserve as we know all too well also has a hand, but that is a different story.

Most publicly traded companies report in a public venue quarterly. Several years ago we coined the term, 90 day treadmill as it comes at you fast AND can cause short-term knee jerk reactions … another story for a different time.Treadmill

Earnings Season Under Way

As of today we are a little over 10% of the was through, using the S&P 500 as our benchmark.

So how have we done? … Awful, BUT not as bad as expected.

This from our friends at Factset:

  • Earnings Scorecard: Of the 56 companies that have reported earnings to date for Q1 2015, 77% have reported earnings above the mean estimate and 46% have reported sales above the mean estimate.
  • Earnings Growth: For Q115, the blended earnings decline is 4.1%. If the index reports a year-over year decline for the quarter, it will be the first time since Q3 2012 (-1.0%).
  • Earnings Revisions: On March 31, the estimated earnings decline for Q1 2015 was -4.7%. 
  • Valuation: The current 12-month forward P/E ratio is 17.0. This P/E ratio is based on Thursday’s closing price (2104.99) and forward 12-month EPS estimate ($123.94).

Broadly management teams are meeting earnings expectations while still in search of sales!

Just by chance we stumbled upon a terrific interview last week that rhymes with our views by a very famous person on Wall Street. Much of the interview explains eloquently some of the economic growth woes.  Watch for a multiple part weekly Wednesday series!

Have a Great Monday!

John A. Kvale CFA, CFP

http://www.jkfinancialinc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225

 

December 2014 End of the Year Financial Planning Tip, Capital Market and Economic Review (Video)

Welcome to our monthly Economic, Capital Market, and Financial Planning tip of the month.

This months Financial Planning Tip of the month, may help you earn extra dollars this coming year!

For those new to our writings, we touch on the most pertinent Financial “stuff” along with a video of my mug that has even more specialized details of the latest month as well as this post.

Ok…let’s go!

VIDEO

You Tube Direct Link   or   Vimeo Direct Link

 

Another Financial Planning Tip: Spread retirement contributions Evenly

 

Spread Evenly Spread Even

Due to control of investment options (not great) and regular contributions (that’s your dollars) spread your contributions over the year and attempt to max your retirement plan out in December.

By doing this you will lower the worry of less control of your investments AND dollar cost average into your plan throughout the year.

Remember, if it’s a new plan or your contributions are making up the majority of the account, making it a beast (aggressive) may be best.

Oil drops like a lead balloon

This ETF called USO (US Oil) is a reasonable proxy for oil prices. Don’t you think it’s hard to believe the world’s oil prices can change that fast? Of course it is. You never know if they were over priced to begin with (for a LONG time) or if they are overshooting on the downside. Our bet, the latter. We are certainly aware asset classes can stay out of favor for some time.

DJP 12-31-14

Here is another good example of a basket of  commodities (Gold, Silver, Oil, Beef…etc) that we really like and include in portfolios for diversification.  Hmmm …. looks pretty silly holding these as they fall like a rock ?  Buy low!

DJP 12-31-14

Let’s go back to 1-1-14 and see what this same basket looked like. While not always easy to hold, rest assured they don’t always go in just a downward direction.  We trimmed these positions as they weights became too heavy for portfolio allocations. Sell High!

DJP 1-1-14 to Mid Year

 

Thanks for your time and Happy Start to 2015 !

 

John A. Kvale CFA, CFP

http://www.jkfinancialinc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225

Earnings Update….Barron’s Cover Dow 16000 ??

So far earnings (aka 90 day treadmill) have been “ok” to “good” a far cry from bad and not near terrible, however as we have mentioned before capital market levels are demanding a “good” to “great” season.

This week we get another large group of very important companies and additional reads on the broad economy via several important economic reports. If the season continues at the current pace we would expect our slightly conservative view to become more popular….time will tell.Barrons 16k

Barron’s Cover Jinx?

Over the weekend the cover of Barron’s ran a “Dow 16000” headline which is always entertaining and makes for great reading. While we do think Dow 16k is in the cards…EVENTUALLY, we think it may be later rather than sooner. To be fair the Barron’s article was not predicting an immediate climb to the 16k level, but we find comments such as

……74% of money managers identify themselves as bullish or very bullish about the prospects for U.S. stocks……

a bit too optimistic given our earnings findings and economic expectations. I guess someone has to be in the 26% !

Have a Great Monday and a super start to the week!

John Kvale

214-706-4300
http://www.jkfinancialinc.com
8222 Douglas Ave # 590
Dallas, TX 75225

90 Day Treadmill Begins Next Week…Taxes, Taxes and …….Taxes!

It’s hard to believe the official/unofficial start to the 90 day treadmill begins the next week with Alcoa…seems like we just finished Q4 2012.  Here are the details for our electronic diary:

Consensus earnings from Standard and Poors

4-5-13 S&P 500 Q1 2013 EPS Est

4-5-13 S&P EPS Est Q 1 2013

For those into details, the bogey is $25.49 for S&P 500 earnings this quarter…if this number is hit, our trailing PE will be a smooth 16 (This is a high number…..frothy…)

Taxes, Taxes and more Taxes….The good and the bad

Complication is down this year as we are all getting used to the new reporting. From our perch most taxpayers and professionals are all on the same page and taxes preparation is running smooth…..of course it is not over yet, but we are close as that is a light at the end of the tunnel…not a Train…we hope!

Generally we are seeing more taxes paid in this year than prior so if you fall into this category do not feel alone. We would expect to see US government receipts numbers up from prior years, based on our sample view.

Travels…

I will be out of town in the afternoon today on a father dad trip to Eastern Texas…this time all family members are invited, as the three-year Indian Princess gathering comes to an end…time goes quickly.  Sunday brings tennis for the 8 year old and uninterrupted tax reviews for myself.

Have a Great Day and a Super Weekend!

John Kvale

http://www.jkfinancialinc.com
214-706-4300
8222 Douglas Ave # 590
Dallas, TX 75225

90 Day Treadmill Final Update for Q4 2012 …aka Earnings Season

Often times our posts and articles act as a diary for us as we are able to clearly look back in the future and see what the expectations and results were at a point and time.  Just as that old saying goes “An analysts, economist or forecasters worst enemy is someone with a good memory.”

So for the record, with all but a few stragglers (less than 2% left) in the S&P 500 reported, how did it go?  Again, we turn to our friends at Standard and Poors and Factset for our information since they do a superb job of recording and presenting the results with no biases or opinions….just the facts, so to speak.

Key Metrics From Factset

  • Earnings Growth: The estimated earnings growth rate for Q1 2013 is -0.6%. If the final number is negative, it will mark the second year-over-year decline in earnings for the index in the past three quarters.
  • Earnings Revisions: On December 31, the earnings growth rate for Q1 2013 was 2.2%. All ten sectors have recorded a decrease in expected earnings growth, led by the Materials, Consumer Discretionary, and Information Technology sectors.
  • Earnings Guidance: For Q1 2013, 82 companies have issued negative EPS guidance and 25 companies have issued positive EPS guidance.
  • Valuation: The current 12-month forward P/E ratio is 13.4. This P/E ratio is between the 5-year average (12.8) and 10-year average (14.2).
  • Earnings Scorecard: Of the 489 companies that have reported earnings to date for Q4 2012, 71% have reported earnings above the mean estimate and 64% have reported revenues above the mean estimate.

Our View on the Year End 2013 S&P 500 Earnings

Here is where we chime in…the Valuation point above is based on estimates that are entirely too high in our opinion. The following chart of the total all in public analysts estimates for the rest of the year 2013 paints a laddered picture of rungs that are just too high in our opinion…BUT we of course COULD be wrong….we are comfortable in our skeptical opinion…here is your chart, again from
Factset:

Factset 3-8-13 SP 500 FWD EPS est

Factset 3-8-13 SP 500 FWD EPS est

We are not saying numbers are going to fall off a cliff, however, blending the historical views to current from our friends at Standard and Poors, the following chart shows an optimistic view from early 2012, falling to more reasonable, but still too high levels in our opinion.

Standard and Poors 3-8-13 EOY S&P EST 2013

Standard and Poors 3-8-13 EOY S&P EST 2013

We hope we are wrong but we do not think so. Time will tell.

Thanks for reading our “diary” in this case….two graphs and an extra long post…I must still be on spring break….sorry too much java !!!

Have a Great Day!

JK

214-706-4300
http://www.jkfinancialinc.com
8222 Douglas Ave # 590
Dallas, TX 75225

A Ghostbusters Market? Still “Two Down One Up”…. 90 day treadmill …. Weekend flight

With a capital market that seems to be chugging along ignoring any bad news while seizing the good news, I was reminded of the original Ghostbusters movie. The sweet elder librarian seemingly harmless and friendly. (Bear with me it’s a Friday…Thank you)

For those that do not recall here is a picture:

SweetLibrarian

Markets much like the sweet woman in the movie do have a way of changing. We feel it is still a “Two Down One Up” risk/reward capital market. Let’s not let our guards down as the sweet markets do have a way of changing. For those who forgot, this sent Bill Murray and friends scampering away…

Not sweetlibrarian

If we are cautious and know the possibilities, hopefully capital market moods will not scare us!

Earnings Season:

After today about 20% of the companies in the S&P 500 will have reported (90 Day Treadmill) and so far the results are ok to good, but not great. Most importantly guidance has been ok as well. We are happy with he results, but feel capital markets are being a bit too optimistic at the moment, such our caution. We will keep you updated as the treadmill continues in full force of the next 7-8 business days.

Weekend Travels:

This weekend I will miss a basketball game of my daughters as a business flight and meetings collide on Saturday/Sunday, but she will be in good hands and maybe even play better without the pressure of dad,  dinner tonight will be extra special, I hope..haha

Have a great weekend!

JK

214-706-4300
http://www.jkfinancialinc.com
8222 Douglas Ave # 590
Dallas, TX 75225
 
 

“Meet EPS..miss on revs…fiscal cliff concerns” and ….JK On the road again

As of today we are over the half way period of S&P 500 company earnings (90 day treadmill) reports. As usual, Donald “The Brain” has been diligently listening, reading, reviewing and analyzing these reports by the droves. A common theme has risen to the top this season which comes from the mouths of more than 80% of our followed executives sounds like this:

We are happy to report X earnings….” (beating estimates) …”revenues have been challenging” (missing estimates, slower revenues) …..”and we are concerned as well as our customers and vendors about the fiscal cliff” (the fiscal cliff is of much greater concern than we thought it would be by key executives and is making for a domino effect of a collaborative holding back on projects)

Overall the theme is slowing…not stalling, or falling, but definitely slowing. This is not surprising to us at all and is why we have felt the capital markets have been overvalued and too optimistic late this year. It appears as of late capital markets are taking a more realistic view, again which we have been happily expecting.

The challenge will be to determine if we continue to slow, pick up steam or just plod along.  The macro data appears to be pointing up for the housing sector, which has been an anchor for a LONG time and is a very large portion of the economy. We will keep you posted.

Today I find myself on the road out of the state but as usual tethered to the office easily via technology. My only issue with this trip is the absence of “Pumpkin Day” for my 7-year-old daughters school…yes it was another late night before the annual dress the pumpkin contest, but they will hopefully forgive me this time, whew…

Have a Great Day and a Super Weekend!

JK

214-706-4300
http://www.jkfinancialinc.com
8222 Douglas Ave # 590
Dallas, TX 75225

Slight tone change…Earning season ok so far…..Happy Weekend

Some days we awake feeling slightly less than 100%, who knows why, but it happens. We detect a similar feeling in the capital markets at the moment. Possibly earnings season, or maybe fatigue, no matter the reason, the capital markets, at least for the moment, are feeling cranky. We will see how long this goes on. (We have been expecting this for some time.)

Earnings season (aka 90 day treadmill) thus far has not been bad. We are pleasantly surprised, however the next two weeks are the  fire hose of reports and we will  have a better picture with more data.  We will keep you updated.

The darn spelling cookie jar received another $10 yesterday as I mistakenly used Mean for Median in the last post, not to worry, it is fixed and my pocket is slightly lighter..haha (I completed that post at 4:30 am…must not have been completely awake…grrrrrr)

Here at home the weekend brings a long run and preparation for a late week travel schedule next week (out Thursday and Friday) as the family continues to get excited about Halloween.

Have a great weekend and enjoy the season change…here in Dallas it was almost 90 yesterday…what fall?

JK

214-706-4300
http://www.jkfinancialinc.com
8222 Douglas Ave # 590
Dallas, TX 75225

Earnings Season AKA 90 Day treadmill is here….expectations versus realities

Today Alcoa (AA) unofficially kicks off earnings season. While we are uncertain as to how this company has become the name sake for the beginning of earnings season (90 day treadmill) we acknowledge the line must be drawn in the sand somewhere, and that we are digressing.

For many Wall Streeter’s the infamous 90 day treadmill (earnings season comes at you like a perpetual treadmill every 90 days, such the name) is all about expectations versus realities. Continually companies cleverly manage expectations down throughout the quarter only to surprise to the upside, although not in all cases.

Here is a chart from Standard and Poors of Q2 2012 earnings for the S&P 500 from a year ago until lately.

Clearly a year ago, this quarter’s earnings had greater expectations, however as of late, this seems very doable.  The devil is always in the details and we will see how the macro economy has changed managers outlooks.

While the fourth of July marks the official start of vacation season for many on Wall Street (expect lower trading volumes), sometimes also known as the summer doldrums, given the awkward Wednesday holiday last week, we will be in full throttle mode this week, so keep those email boxes empty as we have a lot of catching up to do!

Have a Great Week! We will be in touch a lot this week!

JK

214-706-4300 www.jkfinancialinc.com