Tag Archives: Earnings Estimates

Earnings Estimates Coming Back … Slowly

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

90 Day Treadmill AKA Earnings Begin

We coined the presenting of earnings each 90 days the “90 Day Treadmill” some years ago. While we like to see the earnings, many compromises occur with such “Short-tism” Wall Street puts on companies. Treadmill

Miss an 90 day checkup, frequently Wall Street Punishes the company way too much in many cases … Oh we digress…

Earnings Season Update

Here are the latest expectations from Factset:

Total Earnings are set to fall almost 10%, heavily influenced by Energy.

4-15-16 Earnings Exp - Factset

Sales- Revenue Expectations – Once again heavily influenced by Energy, but Sales are hard to come by in our current economy.

4-15-16 Revenue Exp - Factset

So earnings are weak, sales as well … A logical question would be – “Why are the capital markets hanging in so well ?”

Capital Markets Look ahead, and analysts are pretty high on the remainder of the year – meaning, they are expecting nice bounce back growth- Again from our friends at Factset

4-15-16 Earnings By Quarter to 1-17 - Factset

If managers are able to keep in line with expectations, all clear…if forecasts are weaker… expect more chopiness !

The great news is our digital forecasting diary has it recorded for review later in the year … when forecasts become reality!

Have a Happy Monday…sorry for being so heavy !

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

 

March 2013 is gone…Capital Market events and Video Summary

March is gone, our succinct summary of events for the month!

Here is our video that incorporates your suggestions…please KEEP THEM COMING!!

The last earnings (90 day treadmill) trickled in lower than expected, printing a year over year loss in the S&P 500 companies. Analysts were undaunted and kept their rosy forecasts.

2-22-13 Factset 2013 S&P 500 Estimates

As the first week of March ended, interest rates stole the show as the 10 year popped over 2% for the first time in a while  this time holding on adding ammunition to a fast money move out of bonds and into stocks.

10 Year Yield Over 2%

10 Year Yield Over 2%

During the second week, retail sales surprised us with a very strong showing despite the recent tax increase digestion, a positive for the continued strength of the consumer.

Econoday Retail Sales as of 2-13-13

Econoday Retail Sales as of 2-13-13

Next up….Cypress, the little country that was taken to the wood shed.. As depositors get scalped after being told just months before, Not to Worry! Who to trust and Contagion!

Cypress

April should be fun as we enter another earnings season not to mention Uncle Sam’s favorite dip in our pocket month.

Have a great day!

John Kvale

214-706-4300
http://www.jkfinancialinc.com
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

Show Us the Money…..90 Day Treadmill aka Earnings update..Chinese New Year

From our perch we are happily surprised at the continuation of efficiencies companies are churning out. We also feel a bit snookered as many managers were VERY conservative on their prior Q 3 2012 call (tax, fiscal cliff concerns) driving estimates somewhat lower.

A total of 343 companies out of 500 have reported thus far in our favorite monitored pool, the S&P 500. Here’s the bottom line from the horse’s mouth, Standard and Poor’s:

  • 224 out of 343 or 65% beat their estimates
  • 79 missed  their consensus estimate

More important facts from Standard and Poor’s:

  • $23.53  S&P 500 adjusted earnings for the quarter (Q4 2012) so far (78.4% reported)
  • $23.73 YEAR AGO (12-31-11)  S&P 500 adjusted earnings for the quarter

New accounting treatment for pensions is weighing down earnings a bit, but companies ARE NOW PRINTING YEAR OVER YEAR NEGATIVE GROWTH ($23.53-$23.73= NEGATIVE 20 cents.) This has us concerned, brow raised, slight perspiration, but no towel necessary….yet.

According to Factset, guidance for the next quarter has not been good, however there is a small sample size of only 80 companies, 67 of which have guided negatively. We are watching this closely as well and will give the small sample size the benefit of the doubt.

Show Me the Money….this is why we are concerned..

Earnings Estimates for the remainder of 2013 by quarter

S&P Estimates 2013

While this chart does not look too threatening, take a closer look…the growth rates assumed are too much in our opinion. Just looking at the year-end quarter growth rates (12-31-12/12-31-13)  that is a 26% year over year expected growth rate. WE DON’T THINK SO!

For now market participants are either ignoring this or expecting this, either way, dangerous in our opinion. Time will tell, but caution is advised!

Have a Great Monday and sorry to be so heavy this early in the week!

JK

PS If it is that easy to review, why are others not doing it ?? We are glad they are not as market inefficiencies allow profit opportunities….

PSS Gong Xi Fa Cai…Happy New Year to our Chinese Friends as their country celebrates for the week (Their Capital Markets will be closed all Week)

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