Tag Archives: Earnings Season

Market Valuation Update … How are we doing? Forward PE Ratio Review

As mentioned multiple times … with recent examples here and here by almost any metric Capital Market valuations have been and are stretched.

As a reminder this does not mean that markets have to come tumbling down to earth … just that heightened risks of sharper declines may be possible. Also as a reminder, just like our teenager with oversized clothes grows into them … as earnings increase faster than Capital Markets rise, valuations can come back in line! YAY

Updated Valuation Metric from our Friends at JPMorgan

And while still stretched take note of the very far right of the graph as it has smartly turned over as earnings outpaced Capital Market Growth



This is why the Graph is moving in a better direction – huge expected earnings in view….

Nice….

Still no time to swing for the fences, which we never do- but good progress…

Have a Great “Better Valuations” 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

Earnings Matter, ultimately the most, let’s take a peek at how they are doing

With earnings being the ultimate driver of Capital Markets it’s always good to stick our heads down into the weeds occasionally to see how corporate managers are navigating the waters.

Our favorite go-to source for this information is from our friends at Factset, a research arm that does terrific tracking …

Here are a few charts with our notes:

This following is an estimate of Earnings for the remainder of 2019 and for the year 2020 – notice expectations are positive year over year 2018 to 2019 but not much growth is expected from the analyst community – Tariff agreement would likely change this expectation quickly…

img_1243-e1557890593225.png

Next up, how the change in estimates has occurred in real time – take note of the drop near the end of the year 2018 – while it looks like a larger than normal drop, and we prefer it increasing, it is only about a 5% total expected drop but again still a year over year increase as seen from the prior chart.

img_1242-e1557890631119.png

Lastly, we had to throw one of our favorite charts in from our friends at JPMorgan – the lagging blue line, that actually looks out of place, is the current market expansion rate – note how slow this expansion (2007-current) has been. We find this very interesting as even the 2001 expansion was at a much faster pace than our current. Could we be entering an extended period of slower, but more stable growth? This would also speak to lessened concerns of inflation and lowered expectations moving forward…

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Overall, lets give corporate managers an A to almost A+, especially those dealing with overseas trading partners of any kind.

Have a Great “Update 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.
jkfinancialinc
street-cents

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

Earnings Update – Good Update!

Earnings are the ultimate driver of higher equity/stock prices. All other items being equal (which they rarely are, but go with me here) better earnings lead to higher stock prices.

Sometimes a low bar that can be stepped over leads to better prices.

As you can see by this busy chart… earnings estimates tend to fall as the year passes.

EPS Dardanelles.png

If we happen to not have a decline in earnings as the year goes on…a surprise  based on everyone getting too negative, maybe prices will trend higher? or at least current higher prices are justified? Not forecasting, only saying!

Check this chart out from FactSet:

8-1-16 FactSet rev chart

Revenue growth has been hard to come by…actually almost impossible, but as this chart notes  something is going on… Could a turn be in the mix?

Another reason never to get too negative or two positive…somewhere in the middle!

Have a Great 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

 

 

 

 

 

 

 

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

 

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

 

Earnings Update … Monday Travels (Groundhog) … Birthday Boy

Currently we are smack in the middle of earnings season ….  Guess What ?

They are pretty good, not great, but certainly not bad. Hats off to managers as they maneuver through a sluggish economy and a slightly ill consumer. Well done guys.

We will go deeper soon, but so far so good!

Ground Hog Day Travel

Monday a week ago, on a planned fun turn-around trip , I DID spend 2.5 hours in a plane, but unfortunately never left the tarmac, as storms and low gas canceled both the outbound and return.

Monday we try again. Rain anyone !!!!

Birthday Boy  … Happy 7th

Happy 7th birthday Pierce, seems only yesterday we brought you back from the hospital.Pierce

This is why ….. It’s a Friday, headed into a weekend, I REMIND …enjoy and do not forget to spend time with those special in your life… It goes fast !

John A. Kvale CFA, CFP

PS Some BIG NEWS soon!! Tease Tease

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

Earnings Updates … Busy Next Week

Yesterday (7-24-14) there were 50 companies in the S&P 500 (our favorite domestic index) reporting earnings. Making us very much in the middle of earnings season.

Earnings Season – So Far So GoodTreadmill

Coming into this quarter’s 90 day treadmill, AKA earnings season, expectations were for about 5-6% growth. Well….it looks like we are going to do just that. Some may argue the bar was low. Stepping over a lower bar is much better than falling short of a higher bar.

Even though it is earnings season, market participants are scarce based on volume and odd trading patterns.  Over all, so far so good ! More to come after we get farther along.

Due Diligence Meeting

Next week very early on Wednesday I travel to the land of the Longhorn for a due diligence meeting with a major financial firm to review their offerings in person and meet management.  Donald “The Brain” and I have been researching them for about six months now and expect to bring you more information soon.

Ahhhh….but today is a Friday (hot Friday here)  and that means its time to enjoy those special in your life…it’s goes fast…cherish the moments !!

See you next week !

John A. Kvale CFA, CFP

PS I will be on the road for most of early August, working remotely far from the heat as in the past several years, with family (dad & family too), fellow professionals, friends, and cool weather …. tethered heavy electronically.

PSS Correction from last weeks summer reading post, the Mrs. is a Vegetarian, not Vegan.

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

Long Weekend … Earnings Haves and Have Nots … PS Save the Date: May 1, 2014

Monday, being Martin Luther King honored holiday, banks, government offices, capital markets, and our offices will be closed.  Feel free to email if you have a question as we always remained electronically tethered.

Short Holiday Season Earnings

With a December 2013 several day deep freeze across most of the US and  a 30% shorter season due to the calendar, it appears from earnings reports so far Santa was not able to make it to much of the country (financial nerd attempted humor.)Earnings Season

The “Have’s and Have Not’s” of earning season are currently blurry but beginning to take form in a more dramatic fashion than past holiday seasons. We are closely watching for possible continued contagion and will keep you posted.

NEXT WEEK brings a neat Richard Fisher speech review (another echo of our thoughts) along with other fun reviews of our thoughts and maybe Davos Switzerland update (2014 World Economic Forum meeting), but that is next week. Enjoy your Friday and your long weekend if applicable.

Thanks for reading and following our works !

John Kvale CFA, CFP and the J.K. Financial, Inc. Team

P.S. Shhh ….. We have a VERY special save the date speaker announcement we are putting the finishing touches on (Social Security and Medicare EXPERT! One of our top topics for clients) Pencil your calendar for Thursday Evening May 1, 2014 ! More to come.

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