Tag Archives: Earnings

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

April 2017 Podcast Video, Financial Planning Tax Review and Earnings Update- By John Kvale

Whew, that was easy…. tax season is finally mostly over ….

We wanted to look back one last time on our personal taxes before we sunset those tax strategies for the high point of the season….

As a reminder,  we started with an Audio Podcast format for those that are unable to SEE the video or just prefer to listen to the audio… this makes the review slightly longer, but more descriptive.

Enjoy!

April 2017 Video

 

Financial Planning Tip(s)-

AMT Tax Reminder

We ran across a lot of AMT or Alternative Minimum Taxes this season

Here are the key thoughts from our detailed post on AMT earlier this month-

  • Incomes between $170k and $313k joint and singles over $100k – you are in the cross hairs of AMT
  • Deferring income may be useful
  • Accelerate income

There is not a lot of planning changes with AMT, but in this case knowledge may be power!

Possible MAJOR tax reform

Late in the month an overview of major tax reform was released.

Here is a link from the White House

Here is a link from Barron’s that does a pretty good analysis

Here is our article on the possibilities earlier this month

What to do if you overfund your 401k/retirement plan

In our overfunding 401k post here, we discuss how your 401k/retirement plan can get overfunded….. here are the main points

  • Refund the extra amount ASAP
  • Apply the extra to the new year
  • If its a super small amount, its not the end of the world

Capital Market Comments

First Double Digit Earnings growth since 2011 expected

From our friends at Factset, who do a terrific job of outlining historic and future earnings.

Earnings are the ultimate driver of capital markets!

4-27-17 SP earnings estimates - Factset

What is nice about these estimates are that historically companies have been beating the street estimates … if this continues, the actual earnings may be even better double digit growth…. time will tell and we will be watching!

Hello May!

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 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

 

 

 

 

 

 

 

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

Oil and Energy? Factset Estimates

No doubt energy has been left for dead.

Why hold energy investments as the world crashed around them?

There will be more pain…BUT

Three charts from Factset, an accumulator of estimates and reports:

Energy certainly has the lead in earnings surprises

4-29-16 Sector level surpises

Wow…..

Of course it is not all peaches and cream … THIS year’s estimates:

4-29-16 2016 Growth Estimates

Next Year’s Estimates …

4-29-16 2017 Growth Estimates

Wow….did we say wow !

What if they are only 50% correct ? Of course coded forecast !

Never go “All in or All out!”

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

 

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

 

Q 3 2015 Quarter Performance Report Cover Letter (Clients)

Dear Investor:

In “Lucy like” pulling of the football to Charlie Brown, Janet Yellen, head of the Federal Open Market Committee (FOMC) choose not to raise rates by an even tiny .25% at their most recent meeting in September. In defense of not raising, Yellen painted a gloomy picture of the domestic and global economies. Global markets, in a seasonally weak period, acted gloomy, dropping double digits as a whole for the quarter. We do think rates will eventually be raised, but possibly not until next year.

Frothy markets only need an excuse, not a reason. While we are not sure if the reaction was a cause and effect, or just the excuse, weak capital market results were the same. Additionally, domestic corporate earnings on average are flat to negative, driven heavily by the Energy sectors sharp losses. We discuss this in greater detail in our current Newsletter.

Speaking of excuses, fears of China’s economic slowing have gained traction in headlines recently, especially affecting commodity dependent emerging markets who have received the double punch of lower commodity prices and a slightly slower exporting partner in China. With so many levers to pull and such a huge population, it may be only a matter of time before these Asian fears subside and turn from negative to positive, putting the wind at the back of an underperforming asset class and especially emerging markets – one of our favorites.

The Good news for us as investors is cheaper prices make for better long-term gains in the future. There may be headwinds, but capital markets according legendary investor Warren Buffet “Generally go up, three out of four years.”   This compounded with historically a positive time of the year, may lead to a better end of the year.

Enclosed is your Q 3, 2015 performance report which outlines the last ninety days, a very small period of time in our long-term journal to financial success.

Have a Great start to Fall !

Sincerely,

 

John A. Kvale CFA, CFP

Enclosure (Q3 2015 Performance Report)

Q 2 2015 Quarter Performance Report Cover Letter (Clients)

Dear Investor:

Very near the end of the quarter, a triple threat of events occurred that put investors into a more conservative mode. The long awaited possible Greece removal from the Euro nations, China’s overheated market hiccupped, and a Puerto Rican default hit the headlines. We were actually pleasantly surprised market participants were not more restless.

Earnings

As mentioned in greater detail in our Q 3 Newsletter, which is hot off the presses now, USA earnings, the “Mother’s Milk” of higher stock prices are expected to be very meager, if any, for 2015. With a pause in earnings growth, frothy valuations and the afore mentioned headlines, markets may continue to have a more conservative tone.

Interest Rates

We continue to believe the Federal Open Market Committee (FOMC) will raise rates later this year. While not making headlines at the moment, this may turn out to be the bigger story for the year 2015. It has been nine years since the FOMC has raised rates, and we think the near zero rate environment has overstayed its welcome, and is doing little to help our economy at this time.

Higher rates, MAY be a headwind initially to both equity markets and fixed income, however longer term higher rates may produce a better economic environment.

Summer Doldrums and the Election

Smack in the middle of summer doldrums, many “Wall Streeters” have already headed to their favorite summer retreat, leaving greener hands in control. Combine a heavier than normal summer doldrums, along with Election headlines, we may have a few bumps over the summer. Not to worry, diversification is especially our friend during times such as these.

Have a great rest of your Summer!

Sincerely,

 

John A. Kvale CFA, CFP

Enclosure (Q2 2015 Performance Report)

Q 3 2015 Newsletter Complete and In the Mail … Video too … Friday

The Third Quarter Newsletter for 2015 has been posted here on our blog and at our company site at J.K. Financial, Inc. Starting this year, we have included a video that goes deeper into our thinking on the entire Newsletter. It can be found below or on YouTube here or on our website here.

Newsletter Topics

  • Generational Makeups with a Millennial Focus
  • Earnings Expectations and Capital Market Affects
  • 7 Habits of the Unhappy – A Financial Parallel and How to Avoid them
  • What we are all doing this summer (Usually our most commented on Article)
  • Making Hay While the Sun Shines
  • Parting Thoughts on our Holiday Party, Wharton Sirius Satellite Guest, Credit.com first article

Newsletter Video

 

Have a great Friday!

John A. Kvale CFA, CFP

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

JK Street Cents Logo

 

Earnings Update from Factset … From our Q3 Newsletter

With the Q3 Newsletter in motion, a few very interesting items are taking form.  Brevity for you reading ease.

Note the growth estimate from 2014 to 2015 …about $2 or less than 2%.

Earnings are the ultimate driver of stock prices!

6-26-15 Factset EPS estimate to 2016

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

JK Street Cents Logo