Tag Archives: Earnings

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

Posted on July 7, 2021 by | Leave a comment

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

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

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More Positive Data Points …. Factset Earnings … JOLTS Job Openings … PPI Producer Prices …

Posted on August 12, 2020 by | Leave a comment

As promised, last week, we have some more good data points….

Again, we feel Market Participants maybe a bit overzealous here … expect bumps …

BUT … the earnings and economic front are showing good data points…

S&P 1 Month Earnings Estimates From Our Friends at Factset

Take note of the usual guide down historically in this chart, with this months most recent, bucking the trend… Nice

8-3-20 Fact Set Earnings estimates

JOLTS – Job Openings and Labor Turn Over – aka Jobs Available

The Jolts report is a good measure of the possible jobs available in the US Economy (Watched closely by the FOMC – Federal Open Market Committee – The FED)

What is important about this report, is the expectation was for about 4.9 million jobs and the actual came FAR ahead at 5.9 million … Nice X 2

8-11-20 Jolts 4.8 exp 5.9 actual

PPI – Producer Price Index – Price of Production Items

Lastly and briefly, so as not to have you think you have fallen into an Economics class….haha

The PPI is a broad measure of domestic producer sales prices… when it’s going up, there is demand and more importantly when down, slack…

There are various ways to measure this Economic report (Core, Month over month, year over year, %)  … all measurements beat their estimates handily …. Nice X 3!

8-11-20 Core PPI

There you have it… some nice market and economic numbers for your summer hump day!

Have a Great “Economics Beating Expectations” 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 Economy, FOMC, Investing/Financial Planning, Market Comments

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

Posted on May 15, 2019 by | Leave a comment

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…

img_1244.png

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

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

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Q 4 2018 Newsletter Video Audio Podcast Review By John Kvale

Posted on October 3, 2018 by | Leave a comment

Welcome to our Video and Audio Podcast Review of our Q 4 2018 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.

Click Here for direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page

BREAK IN – Save the date for the Holiday Party

November 17th – Saturday before Thanksgiving – Dallas Athletic Club from 3-5 pm

DAC

Let’s get going!

Q 4 2018 Newsletter

And here is your review!

Capital Market Talk

Earnings and Markets Eventually Converge

In this hugely in depth article, first we discuss the effect of earnings eventually driving capital markets, but disconnects can occur. It can even be a good thing for Capital Markets to WAY underperform earnings, as they are this year because in brings valuations back in line.

Here is the key graph

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

Higher Rates, a Short Term Headwind, Eventually a Tailwind

With sustained lower rates over the last decade, memories have faded on the tugging headwinds that higher rates have – IN THE SHORT TERM – on the mandatory safety asset class of bonds.

Higher rates are a great thing as Bonds/Fixed Income Assets have a place for almost all investors due to their safety and liquidity.

Once the headwinds subside our fixed income investments will have ridden the yield curve higher and begin paying more income in the form of yield – into our pockets – Finally!
bond index V Interest Rates

Too High of Rates Can Create Trouble

Too high of rates or an overshoot CAN create trouble … or a recession…

Our friends at JPMorgan – historically show that rate is about 5% – yea FIVE percent –

We disagree and think a lower level may now be this tipping point, due to the decade low interest rate level we have just experienced-

Current at two percent, we have a long way to go before getting too antsy
JPMorgan Rate Level for Slowdown

Inverted Yield Curve Update

So far to good- no inversion yet!
9-28-18 90 day to 10 year Inverted Curve status

Financial Planning

This series of articles came out of no where and in like domino fashion, once one was done the next took form and fell into place-

PLUP graph

App of the Quarter – Hardware

Our editor took the fancy picture out due to copyright fears, but our experience with the Firestick has been exceptional – Here are the highlights of our findings

  • Great Savings compared to just full service in many cases
  • Does not take as much internet speed as we thought
  • Bring your home on the road
  • Multiple devices used at once
  • Cuts back on duplicated services
  • Allows cherry picking services

Enjoy the fall –

See Ya next Year – Wow 2019 here we come!

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 Audio, Earnings, General Financial Planning, Insurance, Interest Rates, Investing/Financial Planning, Market Comments, Newsletters, Video

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Second Quarter 2018 Cover Letter Review

Posted on July 9, 2018 by | Leave a comment

On the road to nowhere? Or are we?

While capital markets around the globe may seem subdued, especially compared to last year’s movements, looking beneath the surface there is much going on.

Increased Company Earnings

With the corporate tax cuts, earnings are increasing. Public companies are enjoying terrific earnings growth and logging excellent earnings reports as the year continues. With little movement in capital markets and increased earnings, valuations by most any measure, are becoming less expensive. Also, worth notice in our Q3 Newsletter is a detailed article concerning lowered numbers of public traded companies, a possible source of different valuations moving forward.

Financially Happy Consumer

Broadly, the consumer from a financial standpoint is doing well. A happy consumer, leading to a more freely spending consumer, is an important point for the United States since the Gross Domestic Economy is made up of over two thirds consumer spending. Much of this financial happiness comes before a lower tax burden, likely to be felt by consumers next tax season – again in our Q3 Newsletter there are multiple family scenarios detailing the tax savings due next year.

Interest Rates

Market participants have digested multiple rate increases in stride, unlike times before. With gradual rate increases already occurring in the year, and more expected, normalization of interest rates is occurring without the fears of past. Being the first time in almost a decade to have rate increases, we are on Inverted Yield Curve watch (detailed article again in our Q3 Newsletter) as a possible predictor that rates have moved too far, and a signal of a possible recession. So far this has not occurred.

In closing, our patience theme from the beginning of the year seems to be still best suited.

Have a Great Summer!

John A. Kvale CFA, CFP

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Posted in Clients/Clients Only, Interest Rates, Investing/Financial Planning, Market Comments, Performance Report Cover Letter

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First Quarter 2018 Cover Letter Review

Posted on April 9, 2018 by | Leave a comment

In true Groundhog like fashion, Capital Markets, after getting way ahead of themselves early in the quarter, saw their shadow only to turn, run and hide.

Included in the newsletter, which we sent early to give everyone a chance to view and remind of the tax strategies, is an article about the VIX and its reverse brother the XIV. These funny products along with the more recently noted tariff talk has been the recent excuse for capital markets to act like a bashful Groundhog.

The reality is capital markets got way ahead of themselves and needed time to rest. From our perch we would much rather them rest go sideways or even down a little bit, rather than getting WAY ahead of themselves like they did early in the quarter, only to quickly revert and likely overshoot to the downside.

Interest Rate Increase

In this most recent quarter we did just digest another small interest rate increase. Our new Federal Reserve Chairman Powell, looks to continue the gradual increase rates, slowly normalizing short term interest rates, and continuing on the path left by his predecessor Janet Yellen.

Capital Markets have a very unique way of signaling Interest rates have been raised too far called an inverted yield curve. Look for rhetoric about an inverted yield curve soon, as the historic importance and accuracy of this effect are in our crosshairs at this time.

Consumer and Earnings

With an economy that is two thirds driven by the consumer, a happy and spending consumer along with company earnings, which are beginning to digest the new tax reform, lead to a good backdrop.

As we mentioned in our Newsletters and repeatedly at street-cents, this is likely a year we will need patience, we see no change in that view at this time.

Have a great spring, talk to you in the summer!

Sincerely,

John A. Kvale CFA, CFP

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Posted in Interest Rates, Investing/Financial Planning, Market Comments, Performance Report Cover Letter, Political, Tax Related

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

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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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Capital Markets Ignore … Short Week Concludes … Friday Tennis Weekend

Posted on July 7, 2017 by | Leave a comment

Capital Markets are the ultimate voting machine. Frequently they are VERY irrational, often times they act temperamental, other times they just ignore and move on.

With the recent flexing of various international military muscles and “Breaking News” headlines, Capital Markets …. and their participants, are just moving on down the road and focusing on earnings … which is really what they are supposed to do. NICE!

Short Week

With the celebration of July 4th on Tuesday, Wednesday felt like Monday, making Thursday feel like Tuesday and today …. Oh Boy … Not really sure what day it is. Friday? Yes..

Friday Tennis Weekendtennis-2042723__340

Wimbledon …. Yes it will be going on this weekend, but a more important Tennis weekend to your present party … a National Tournament in a neighboring state (Travels , all good) .. Win our go home, once again, puts the journey into next week if the former occurs…

Ahhh, that is looking into next week and this is a Friday, smack in the middle of Summer. It goes fast, enjoy, relax and spend time with those special!

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, Investing/Financial Planning, Market Comments, World Political

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

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