Key Points:
- First quarter season is over. Median surprise of 3.70% and
surprise ratio of 3.03 for EPS, 1.32% and 2.23 for revenues. Solid
growth of 17.1% (19.1% ex-Financials) reported. Slowdown from
fourth quarter pace of 30.9%, mostly due to super financial company
growth in 4Q. Growth ex-Financials as 19.8% in 4Q.
- Just a handful (26) of S&P 500 2nd quarter results in.
Off to a strong start, with 20.1% year-over-year earnings growth,
and 10.0% revenue growth. Median earnings surprise 5.61% and median
sales surprise 1.88%. Remaining firms (474) expected to grow 9.65%,
12.2% growth expected, excluding Financials.
- Full-year total earnings for the S&P 500 jumps 45.9% in
2010, expected to rise 17.0% further in 2011. Growth to continue in
2012 with total net income expected to rise 13.6%. Financials a
major earnings driver in 2010. Excluding Financials growth was
27.8% in 2010, and expected to be 17.8% in 2011 and 11.7% in
2012.
- Total revenues for the S&P 500 rise 7.80% in 2010,
expected to be up 5.84% in 2011, and 6.37% in 2012. Excluding
Financials, revenues up 9.19% in 2010, expected to rise 9.97% in
2011 and 5.88% in 2012.
- Annual Net Margins marching higher, from 5.88% in 2008 to
6.39% in 2009 to 8.65% for 2010, 9.51% expected for 2011 and 10.21%
in 2012.
- Margin Expansion major source of earnings growth. Net
margins ex-Financials 7.79% in 2008, 7.08% in 2009, 8.28% for 2010,
8.87% expected in 2011, and 9.36% in 2012.
- Revisions ratio for full S&P 500 at 0.87 for 2011, at
0.95 for 2012, both neutral readings. Sharp drop from recent weeks,
but driven by old increases falling out, not new cuts. Ratio of
firms with rising to falling mean estimates at 1.09 for 2011, 1.07
for 2012, marginally positive readings. Total revisions activity
near-seasonal lows.
- S&P 500 earned $544.3 billion in 2009, rising to $793.8
billion in 2010, expected to climb to $928.9 billion in 2011. In
2012 the 500 are collectively expected to earn $1.055
Trillion.
- S&P 500 earned $57.12 in 2009: $83.32 in 2010 and
$97.46 in 2011 expected bottom up. For 2012, $110.70 expected. Puts
P/Es at 15.9x for 2010, and 13.6x for 2011 and 11.9x for 2012, very
attractive relative to 10-year T-note rate of 3.18%. Top-down
estimates, $95.95 for 2011 and $104.01 for 2012.
First Quarter Slower Growth, Still Strong
The first quarter earnings season is done. Net income growth was
17.12%. While that is down from the extremely strong 30.9% in the
fourth quarter, it is still a very healthy growth rate. Almost all
of the growth slowdown is from a failure of the Financial sector to
repeat the massive growth they posted in the fourth quarter.
Growth excluding the Financials was 19.1%, down only slightly from
the 19.8% growth posted in the fourth quarter. Before the first
quarter earnings season started, it was expected that growth would
be just 6.7% for the S&P 500 as a whole, and 10.2% excluding
Financials.
Second Quarter Earnings Season Beginning
We now have 26 S&P 500 firms that have already reported their
second quarter results. We are off to a very strong start. Those 26
firms posted total net income growth of 20.1% over a year ago. That
is down just slightly from the 21.9% growth that those same 26
firms posted in the first quarter.
The results were also much better than expected, with a median
surprise of 5.61% and a 3.60 surprise ratio for earnings. Top-line
results are also off to a strong start, with 10.0% year-over-year
growth for the 26, actually up from the 9.45% growth they posted in
the first quarter. If anything, the top-line surprises have been
even better than the bottom-line surprises, with a median surprise
of 1.88% and a massive 7.67 surprise ratio.
In the early going, though, the medians and surprise ratios can see
very sharp fluctuations, so it is still a bit early to read too
much into the results. For the vast majority (474) still to report,
the rate of growth is expected to continue to slow in the second
quarter, with total growth of 9.65% and growth of 12.18% if the
Financials are excluded.
Note, however, that those year-over-year growth expectations are
still higher than the expectations for the first quarter before the
first quarter earnings season started. I would be very surprised if
we didn’t end up with double-digit growth on both a total and
ex-Financials basis. Normally about three times as many firms will
report positive surprises as disappointments, and that in turn
makes the initial growth projections very conservative.
Revenue growth for the remaining firms is also expected to slow to
5.60% among those yet to report, down from 6.28% they reported in
the first quarter. All of the slowdown, and then some, is expected
to come from the Financials. Excluding them, growth is expected to
accelerate to 9.72% from 7.15% in the first quarter. Much of the
strong revenue growth is coming from the commodity-oriented Energy
and Materials sectors.
Net Margin Expansion
Net margins continue to expand. The 26 that have reported have net
margins of 8.44%, up from 7.73% a year ago. The remainder are
expected to post net margins of 9.62% up from last year’s 9.14. The
Financials continue to be the key drivers of overall margin
expansion. If the Financials are excluded, net margins are still
expected to expand, but just to 8.94% from last year’s 8.71%.
On an annual basis, net margins continue to march northward. In
2008, overall net margins were just 5.88%, rising to 6.39% in 2009.
They hit 8.65% in 2010 and are expected to continue climbing to
9.51% in 2011 and 10.21% in 2012.
The pattern is a bit different, particularly during the recession,
if the Financials are excluded, as margins fell from 7.78% in 2008
to 7.08% in 2009, but have started a robust recovery and rose to
8.28% in 2010. They are expected to rise to 8.87% in 2011 and 9.36%
in 2012.
Full-Year Expectations
The expectations for the full year are very healthy, with total net
income for 2010 rising to $793.8 billion in 2010, up from $544.3
billion in 2009. In 2011, the total net income for the S&P 500
should be $928.9 billion, or increases of 45.9% and 17.0%,
respectively. The expectation is for 2012 to have total net income
passing the $1 Trillion mark to $1.055 Trillion.
That will also put the “EPS” for the S&P 500 over the $100 “per
share” level for the first time at $110.70. That is up from $57.12
for 2009, $83.32 for 2010 and $97.46 for 2011. In an environment
where the 10-year T-note is yielding 2.92%, a P/E of 15.85x based
on 2010 and 13.55x based on 2011 earnings looks attractive. The P/E
based on 2012 earnings is 11.93x.
There has been a sharp decline in the ratio of estimate increases
to estimate cuts over the last few weeks, with the Revisions ratio
for 2011 falling to 0.87 from 1.09 two weeks ago. It was close to
2.0 for both years at the height of the last earnings season. For
2012, the ratio is down to 0.95 from 1.18 two weeks ago. Most of
that decline has been due to old estimate increases falling out of
the sample than due to a flood of new estimate cuts.
We are nearing the seasonal low point in estimate revisions
activity. While the numbers are still firmly in the neutral zone,
the sharp fall off is a bit of a yellow flag. If it continues to be
lackluster as revisions activity picks up in a few weeks it will be
a significant reason for concern.
Fundamentals Remain Solid
The fundamental backing for the market continues to be solid. It is
important to keep your eyes on the prize.
There is lots of news out there, and much of it is more dramatic
than earnings results, but rarely does it have more significance
for your portfolio. Earning are -- and are going to remain -- the
single-most-important thing for the stock market. Interest rates
are an important, but distant second.
We certainly had an impressive week in the market last week, with
the S&P climbing by almost 60 points or 4.67%. The rise through
Thursday was just about enough to offset the losses earlier in the
quarter and bring the second quarter to a nearly flat close.
Greek Drama to Continue
The gains on Friday got the third quarter off to a strong start.
The primary reason for the rally is that the Greek debt can was
successfully kicked down to road. This is not the end of the Greek
drama by any means. Soon enough they are going to find that the
road is a cul-de-sac. The austerity programs that were imposed on
the Greek economy as the cost of getting the loans are shrinking
its economy.
It is extremely unlikely that Greece will ever be able to pay the
money back, and the debt will be restructured (aka partial
default). So is the whole exercise pointless? Perhaps not, if the
European banks use the time to build up their capital so when
Greece does default, they will not go under as well. Either Greece
will be a perpetual charity case, propped up by mostly Germany, or
it will leave the Euro and go back to a very much devalued Drachma.
Unscrambling that egg will not be easy or painless.
The Debt Ceiling
The big remaining worry is the debt ceiling fight on this side of
the Atlantic. The difference between Greece and the U.S. is that
Greece is unable to pay its debts. The U.S., if the debt ceiling is
not raised, will simply be unwilling to do so. That would be
entirely an unforced error.
The Government of the United States defaulting on its debt would
likely have a much larger impact on the markets and the economy
than the impact of Lehman Brothers defaulting on its debts. The
nation would be shoved right back into recession, and one deeper
than the one that followed the Lehman collapse. If that happens,
then corporate profits would also collapse.
However, when push comes to shove, I find it hard to believe that
even Congress could let that happen. While not the most likely
case, the chance of no increase by the time the ceiling is hit is a
very real possibility.
Over the long term we need to close the budget gap, but we need a
balanced approach to it. In theory, both tax increases and spending
cuts tend to slow an economy, but by how much varies a great deal
depending on the nature of the tax increases and the nature of the
spending cuts. Cutting tax subsidies for, say, ethanol is likely to
be far less damaging than, say, cutting spending on
infrastructure.
The most recent plan being discussed is a package of 87% spending
cuts and 13% revenue increases, almost all of the revenue increases
are from cutting spending that is embedded in the tax code, and
which mostly benefits the wealthy. I think that is way out of
balance already.
There is a good argument that what Obama should do is simply ignore
the debt ceiling and issue debt anyway. There are substantial
grounds that the debt ceiling is unconstitutional in Section Four
to the 14th Amendment, but an equally strong argument based on
Article One, Section Eight that doing so would have the Executive
branch stepping on the Legislative branch’s turf. It could provoke
a Constitutional crisis.
In the end, I find it almost impossible to imagine the debt ceiling
not being either raised or ignored. The most likely scenario, and
the one that the markets are clearly betting on, is that there will
be a last-minute settlement.
...But What If...?
The chance of this game of chicken having a tragic ending is no
longer trivial. That tragic ending would result in a huge market
crash.
Taking out some insurance would make a lot of sense in here. My
preferred way of doing so would be to buy some out of the money
September puts. On the the S&P 500 ETF (SPY) the September 120
puts are only trading for $0.89. Obviously I hope that they would
expire worthless, just as I hope that my life insurance policy does
not pay off anytime soon. Still, it is insurance that would be well
worth having.
On balance I remain bullish, and I think we will end the year with
the S&P 500 north of 1400, but that does not mean we will have
a smooth ride between here and there. Strong earnings should trump
a dicey international situation and the drama in DC (provided it
turns out to be just drama, and the game of chicken does not end in
tragedy).
Valuations on stocks look very compelling, with the S&P trading
from just 13.55x 2011, and 11.93x 2012 earnings. That is extremely
competitive with the 3.18% yield on the 10-year Treasury
note. However, be prepared to move to the exits
(or have some put protection in place) if it looks like the debt
ceiling will not be raised.
Scorecard & Earnings Surprise
- First quarter season done, and the second quarter season
starting. So far, 26 (5.2%) S&P 500 reports in. Off to a strong
start, with year-over-year growth of 20.1% -- a 3.60 surprise
ratio, and 5.61% median surprise.
- Positive year-over-year growth for 20, falling EPS for 6 firms
(3.33 ratio); 76.9% of all firms reporting have higher EPS than
last year.
- Very early, the percentages and ratios will change dramatically
over next few weeks.
- Construction and Finance lead in surprises (but just one report
each).
Historically, a “normal earnings season” will have a surprise ratio
of about 3:1 and a median surprise of about 3.0%. Thus in the early
going we are doing much better than average on the median front,
and about average on the ratio front. Early on the ratios and
medians can be very volatile, but it looks like an OK start to
things. Pay attention to the percent reporting in evaluating the
significance of the sector numbers.
Scorecard & Earnings Surprise 4Q
Reported
|
Income Surprises |
Yr/Yr
Growth |
%
Reported |
Surprise
Median |
EPS
Surp
Pos |
EPS
Surp
Neg |
#
Grow
Pos |
#
Grow
Neg |
Construction |
-65.00% |
9.09% |
75.00 |
1 |
0 |
1 |
0 |
Finance |
220.54% |
1.25% |
51.39 |
1 |
0 |
1 |
0 |
Basic Materials |
53.15% |
4.35% |
13.51 |
1 |
0 |
1 |
2 |
Consumer Discretionary |
-3.37% |
9.68% |
8.21 |
3 |
0 |
7 |
1 |
Retail/Wholesale |
17.89% |
16.67% |
5.45 |
6 |
1 |
4 |
2 |
Computer and Tech |
14.32% |
8.45% |
1.90 |
3 |
3 |
1 |
0 |
Transportation |
33.17% |
11.11% |
1.74 |
1 |
0 |
4 |
0 |
Consumer Staples |
15.89% |
11.11% |
0.93 |
2 |
1 |
1 |
0 |
Business Service |
2.59% |
5.56% |
0.00 |
0 |
0 |
1 |
0 |
Medical |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
Auto |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
Industrial Products |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
Conglomerates |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
Aerospace |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
Oils and Energy |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
Utilities |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
S&P 500 |
20.08% |
5.20% |
5.61 |
18 |
5 |
20 |
6 |
Sales Surprises
- Strong revenue start, revenue growth of 10.0% among the 26 that
have reported, median surprise 1.88% (very strong), surprise ratio
of 7.67.
- Growing Revenues outnumber falling revenues by ratio of 4.20,
80.7% have higher sales than last year.
- Still too early to come to a conclusion, but we are off to a
very good start. Pay close attention to the % reported column in
evaluating the sector numbers.
Sales Surprises
|
Sales Surprises |
Yr/Yr
Growth |
%
Reported |
Surprise
Median |
Sales
Surp
Pos |
Sales
Surp
Neg |
#
Grow
Pos |
#
Grow
Neg |
Finance |
27.53% |
1.25% |
39.859 |
1 |
0 |
1 |
0 |
Construction |
-6.14% |
9.09% |
15.205 |
1 |
0 |
0 |
1 |
Basic Materials |
21.20% |
4.35% |
6.389 |
1 |
0 |
1 |
0 |
Consumer Discretionary |
10.54% |
9.68% |
2.991 |
3 |
0 |
2 |
1 |
Consumer Staples |
1.76% |
11.11% |
1.844 |
3 |
1 |
3 |
1 |
Transportation |
11.92% |
11.11% |
1.82 |
1 |
0 |
1 |
0 |
Business Service |
5.44% |
5.56% |
1.702 |
1 |
0 |
1 |
0 |
Retail/Wholesale |
9.36% |
16.67% |
1.568 |
7 |
1 |
8 |
0 |
Computer and Tech |
11.94% |
8.45% |
0.611 |
5 |
1 |
4 |
2 |
Medical |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
Auto |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
Industrial Products |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
Conglomerates |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
Aerospace |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
Oils and Energy |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
Utilities |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
S&P 500 |
10.00% |
5.20% |
1.884 |
23 |
3 |
21 |
5 |
Reported Quarterly Growth: Total Net Income
- The total net income is 20.1% above what was reported in the
second quarter of 2010, down from 21.9% growth the same 26 firms
reported in the first quarter. Excluding Financials, growth of
15.4%, up from 13.9% reported in the first quarter. In the first
quarter for full S&P total growth of 17.1%, growth excluding
Financials 19.2%.
- Sequential earnings growth is 6.85% for the 26 that have
reported.
- For full S&P in 1Q, Industrials, Materials, Autos and
Energy all reported over 40% growth.
- Still too early to draw any conclusions -- six sectors with no
reports in at all, five more with only a single firm
reporting.
Quarterly Growth: Total Net Income Reported
|
Income Growth |
"Sequential Q3/Q2 E" |
"Sequential Q2/Q1 A" |
Year over Year 2Q 11 A |
Year over Year 3Q 11 E |
Year over Year 1Q 11 A |
Finance |
-27.05% |
27.53% |
220.54% |
67.66% |
481.15% |
Basic Materials |
+ to - |
-32.94% |
53.15% |
- to - |
7.64% |
Transportation |
-14.47% |
117.97% |
33.17% |
25.60% |
7.11% |
Retail/Wholesale |
6.85% |
-29.85% |
17.89% |
5.50% |
10.80% |
Consumer Staples |
6.68% |
-5.41% |
15.89% |
-3.89% |
11.61% |
Computer and Tech |
-34.67% |
36.85% |
14.32% |
0.66% |
25.86% |
Business Service |
16.16% |
-9.16% |
2.59% |
4.72% |
6.50% |
Consumer Discretionary |
69.86% |
26.61% |
-3.37% |
-18.25% |
-1.00% |
Construction |
54.89% |
-227.27% |
-65.00% |
-27.72% |
57.14% |
Medical |
Na |
Na |
Na |
Na |
Na |
Auto |
Na |
Na |
Na |
Na |
Na |
Industrial Products |
Na |
Na |
Na |
Na |
Na |
Conglomerates |
Na |
na |
Na |
Na |
Na |
Aerospace |
Na |
na |
Na |
Na |
Na |
Oils and Energy |
Na |
na |
Na |
Na |
Na |
Utilities |
Na |
na |
Na |
Na |
Na |
S&P |
-16.57% |
6.85% |
20.08% |
-1.18% |
21.91% |
Excluding Financials |
-3.89% |
5.75% |
15.43% |
10.39% |
13.89% |
Expected Quarterly Growth: Total Net Income
- The total net income of 9.65% is expected, down from 15.08%
year-over-year growth in the first quarter (and down from 30.8%
growth in the fourth quarter).
- Sequential earnings growth of 1.64% expected, 2.47
ex-Financials.
- Growth ex-Financials of 12.18% is expected, versus 19.31% in
the first quarter and down from 19.8% in fourth quarter.
- Very early expectations are for 12.46% year-over-year growth in
the third quarter, 15.01% excluding Financials.
- Materials. Energy and Industrials expected to lead again;
Construction, Aerospace and Autos expected to post lower total net
income than last year.
Quarterly Growth: Total Net Income Expected
|
Income Growth |
Sequential Q3/Q2 E |
Sequential Q2/Q1 A |
Year over Year 2Q 11 E |
Year over Year 3Q 11 E |
Year over Year 1Q 11 A |
Basic Materials |
-7.41% |
4.96% |
47.12% |
43.83% |
55.63% |
Oils and Energy |
-0.49% |
11.84% |
38.46% |
52.68% |
40.52% |
Industrial Products |
2.74% |
5.70% |
24.66% |
23.49% |
65.09% |
Business Service |
4.06% |
9.59% |
15.06% |
17.48% |
12.50% |
Transportation |
9.28% |
28.18% |
13.60% |
15.66% |
25.85% |
Conglomerates |
4.18% |
8.07% |
13.29% |
-11.31% |
-29.30% |
Computer and Tech |
10.57% |
-6.51% |
9.19% |
6.69% |
24.75% |
Consumer Discretionary |
16.04% |
-2.89% |
8.98% |
21.41% |
15.81% |
Finance |
-3.84% |
-1.34% |
6.81% |
7.88% |
7.16% |
Retail/Wholesale |
-6.57% |
9.29% |
5.27% |
7.17% |
4.85% |
Consumer Staples |
10.09% |
10.85% |
3.06% |
5.72% |
3.42% |
Medical |
0.76% |
-3.72% |
0.22% |
2.44% |
5.90% |
Utilities |
28.01% |
-5.42% |
0.19% |
5.63% |
-1.09% |
Auto |
-17.43% |
-8.48% |
-1.34% |
0.92% |
46.88% |
Aerospace |
5.36% |
7.26% |
-6.32% |
1.98% |
5.04% |
Construction |
33.59% |
184.12% |
-12.08% |
89.32% |
-32.11% |
S&P 500 |
3.53% |
1.64% |
9.65% |
12.46% |
15.08% |
Excluding Financial |
4.85% |
2.74% |
12.18% |
15.06% |
19.31% |
Quarterly Growth: Total Revenues Reported
- Revenue growth strong at 10.00%, up from the 9.45% growth
posted (23 firms) in the first quarter.
- Sequentially revenues 0.94% lower than in the first
quarter.
- Still very early, most of the attention should be on the
yet-to-report tables.
Quarterly Growth: Total Revenues Reported
|
Sales Growth |
"Sequential Q3/Q2 E" |
"Sequential Q2/Q1 A" |
Year over Year 2Q 11 A |
Year over Year 3Q 11 E |
Year over Year 1Q 11 A |
Finance |
-36.09% |
24.68% |
27.53% |
-11.97% |
0.41% |
Basic Materials |
-43.79% |
-13.05% |
21.20% |
3.33% |
6.14% |
Computer and Tech |
-12.28% |
13.50% |
11.94% |
6.56% |
29.56% |
Transportation |
-1.72% |
9.20% |
11.92% |
9.66% |
11.06% |
Consumer Discretionary |
10.18% |
11.26% |
10.54% |
7.76% |
6.30% |
Retail/Wholesale |
12.46% |
-8.22% |
9.36% |
8.58% |
7.22% |
Business Service |
5.54% |
-1.51% |
5.44% |
6.56% |
4.53% |
Consumer Staples |
-1.46% |
0.77% |
1.76% |
2.90% |
1.22% |
Construction |
5.24% |
36.92% |
-6.14% |
-2.55% |
-2.79% |
Medical |
Na |
Na |
Na |
Na |
Na |
Auto |
Na |
Na |
na |
Na |
Na |
Industrial Products |
Na |
Na |
na |
Na |
Na |
Conglomerates |
Na |
Na |
na |
Na |
Na |
Aerospace |
Na |
Na |
na |
Na |
Na |
Oils and Energy |
Na |
Na |
na |
Na |
Na |
Utilities |
Na |
Na |
na |
Na |
Na |
S&P 500 |
3.26% |
-0.94% |
10.00% |
7.44% |
9.45% |
Excluding Financial |
3.99% |
-1.32% |
9.72% |
7.71% |
9.59% |
Quarterly Growth: Total Revenues Expected
- Revenue growth expected to slow to 5.60 year over year, down
from the 6.28% growth posted in the first quarter (474 firms).
Ex-Financials growth of 9.32% expected, up from 7.15% in the first
quarter.
- Sequentially revenues 0.94% lower than in the first quarter,
down 1.36% ex-Financials.
- Financials, Aerospace and Staples sectors have falling
revenues, seven sectors post double-digit revenue growth, Energy,
Materials, Industrials and Discretionary expected to grow sales
over 15%.
- As one would expect in an economic recovery, cyclicals are
leading the way on revenue growth. Energy and Materials growth
helped by strong commodity prices.
Quarterly Growth: Total Revenues Expected
|
Sales Growth |
Sequential Q3/Q2 E |
Sequential Q2/Q1 A |
Year over Year
2Q 11 E |
Year over Year
3Q 11 E |
Year over Year
1Q 11 A |
Oils and Energy |
3.47% |
4.90% |
25.04% |
27.75% |
25.06% |
Basic Materials |
-3.46% |
3.98% |
17.90% |
13.22% |
20.13% |
Industrial Products |
-0.01% |
5.73% |
17.30% |
13.17% |
25.14% |
Consumer Discretionary |
1.90% |
6.45% |
15.19% |
14.51% |
10.58% |
Transportation |
3.04% |
8.60% |
12.02% |
13.72% |
11.97% |
Computer and Tech |
2.83% |
0.18% |
10.46% |
7.87% |
15.37% |
Business Service |
0.52% |
3.30% |
7.64% |
6.25% |
7.58% |
Utilities |
-13.98% |
-2.50% |
7.01% |
2.54% |
-0.69% |
Medical |
-0.28% |
1.03% |
4.57% |
5.08% |
4.33% |
Retail/Wholesale |
-1.43% |
1.24% |
4.44% |
5.01% |
5.68% |
Auto |
-0.76% |
-1.48% |
2.13% |
8.60% |
13.96% |
Construction |
4.60% |
16.32% |
2.04% |
8.92% |
0.97% |
Conglomerates |
-0.16% |
-1.16% |
0.33% |
2.75% |
7.40% |
Aerospace |
5.10% |
6.51% |
-0.79% |
1.80% |
-3.24% |
Finance |
-1.28% |
-7.33% |
-2.73% |
-2.76% |
-2.19% |
Consumer Staples |
1.08% |
-0.79% |
-3.31% |
-1.00% |
5.86% |
S&P 500 |
1.01% |
-0.63% |
5.60% |
5.70% |
6.28% |
Excl Financials |
1.48% |
2.03% |
9.32% |
9.75% |
7.15% |
Quarterly Net Margins Reported
- Sector and S&P net margins are calculated as total net
income for the sector divided by total revenues for the
sector.
- Net margins for the 26 that have reported expand to 8.44% from
7.73% a year ago, and up from 7.83% in the first quarter. Net
margins ex-Financials rise to 8.08% from 7.68% a year ago and 7.54
in the first quarter.
- Among the sectors with firms that have reported, six see
year-over-year margin expansion, three see contraction.
- Margin expansion the key driver behind earnings growth. Due to
seasonality, it is best to compare to a year ago, particularly at
the individual company and sector levels.
Quarterly: Net Margins Reported
|
Net Margins |
Q3 2011 Estimated |
Q2 2011 Reported |
1Q 2011 Reported |
4Q 2010 Reported |
3Q 2010 Reported |
2Q 2010 Reported |
Finance |
31.97% |
28.01% |
27.39% |
17.76% |
16.79% |
11.14% |
Business Service |
25.04% |
22.75% |
24.67% |
26.17% |
25.48% |
23.39% |
Computer and Tech |
16.89% |
22.67% |
18.80% |
19.53% |
17.88% |
22.20% |
Basic Materials |
-6.43% |
18.94% |
24.56% |
0.55% |
-2.56% |
14.99% |
Consumer Discretionary |
14.57% |
9.45% |
8.31% |
9.77% |
19.21% |
10.81% |
Consumer Staples |
9.06% |
8.37% |
8.92% |
10.68% |
9.70% |
7.35% |
Transportation |
4.60% |
5.29% |
2.65% |
2.94% |
4.02% |
4.44% |
Retail/Wholesale |
2.93% |
3.09% |
4.04% |
2.92% |
3.02% |
2.86% |
Construction |
2.70% |
1.83% |
-1.97% |
3.72% |
3.64% |
4.91% |
Medical |
NA |
NA |
NA |
NA |
NA |
NA |
Auto |
NA |
NA |
NA |
NA |
NA |
NA |
Industrial Products |
NA |
NA |
NA |
NA |
NA |
NA |
Conglomerates |
NA |
NA |
NA |
NA |
NA |
NA |
Aerospace |
NA |
NA |
NA |
NA |
NA |
NA |
Oils and Energy |
NA |
NA |
NA |
NA |
NA |
NA |
Utilities |
NA |
NA |
NA |
NA |
NA |
NA |
S&P |
7.74% |
8.44% |
7.83% |
7.07% |
7.42% |
7.73% |
Excluding Financial |
7.47% |
8.08% |
7.54% |
6.87% |
7.29% |
7.68% |
Quarterly Net Margins Expected
- Sector and S&P net margins are calculated as total net
income for the sector divided by total revenues for the
sector.
- Net margins for the 474 yet to report firms expected to expand
to 9.72% from 9.14% a year ago, and up from 9.38% in the first
quarter. Net margins ex-Financials rise to 8.94% from 8.71% a year
ago and from 8.88% in the first quarter.
- Ten sectors expected to see year-over-year margin expansion,
six to see contraction. Sequentially ten up and five down. Further
margin expansion expected for third quarter, rising to 10.01%, and
rising to 9.40% excluding the Financials.
- Margin expansion the key driver behind earnings growth.
Quarterly: Net Margins Expected
|
Net Margins |
Q3 2011 Estimated |
Q2 2011 Estimated |
1Q 2011 Reported |
4Q 2010 Reported |
3Q 2010 Reported |
2Q 2010 Reported |
Finance |
16.77% |
15.11% |
16.19% |
17.43% |
16.43% |
15.28% |
Computer and Tech |
14.69% |
14.72% |
12.41% |
10.08% |
11.06% |
11.61% |
Business Service |
13.32% |
13.20% |
13.85% |
12.62% |
13.68% |
13.77% |
Consumer Staples |
12.84% |
12.36% |
11.65% |
12.23% |
11.57% |
11.56% |
Medical |
13.11% |
11.80% |
10.56% |
10.59% |
12.04% |
11.07% |
Basic Materials |
10.18% |
9.77% |
8.94% |
10.73% |
9.41% |
8.65% |
Oils and Energy |
10.36% |
9.48% |
8.03% |
9.60% |
9.89% |
9.35% |
Consumer Discretionary |
8.89% |
8.93% |
8.38% |
7.72% |
7.19% |
8.07% |
Industrial Products |
9.01% |
8.69% |
8.69% |
7.89% |
8.18% |
8.18% |
Conglomerates |
7.94% |
8.58% |
8.50% |
6.83% |
6.48% |
6.88% |
Transportation |
10.04% |
8.42% |
9.22% |
10.01% |
9.04% |
8.89% |
Utilities |
10.20% |
7.78% |
8.02% |
6.78% |
9.10% |
8.31% |
Auto |
6.52% |
6.19% |
6.14% |
6.49% |
6.19% |
6.55% |
Aerospace |
5.09% |
6.16% |
6.64% |
3.76% |
5.52% |
6.38% |
Retail/Wholesale |
3.31% |
3.56% |
3.29% |
4.14% |
3.30% |
3.53% |
Construction |
4.15% |
3.10% |
1.27% |
1.95% |
2.28% |
3.60% |
S&P |
10.01% |
9.62% |
9.38% |
9.01% |
9.14% |
9.14% |
Excluding Financial |
9.40% |
8.94% |
8.88% |
8.83% |
8.81% |
8.71% |
Annual Total Net Income Growth
- Following rise of just 2.0% in 2009, total earnings for the
S&P 500 jumps 45.9% in 2010, 17.0% further expected in 2011.
Growth ex-Financials 27.8% in 2010, 17.8% in 2011.
- For 2012, 13.6% growth expected. 11.7% ex-Financials.
- Auto net income expands more than 15x in 2010, Financial net
income more than quadruples.
- All sectors expected to show total net income rise in 2011 and
in 2012. Utilities only (small) decliner in 2010. Twelve sectors
expected to post double-digit growth in 2011 and 13 in 2012. No
sector expected to grow less than 5% in 2012.
- Cyclical/Commodity sectors expected to lead in earnings growth
again in 2011 and into 2012.
- Sector dispersion of earnings growth narrows dramatically
between 2010 and 2012, only four sectors expected to grow more than
20% in 2012, seven grew more than 40% in 2010.
Annual Total Net Income Growth
|
Net Income Growth |
2009 |
2010 |
2011 |
2012 |
Basic Materials |
-50.26% |
72.13% |
41.34% |
13.28% |
Industrial Products |
-55.09% |
50.09% |
39.48% |
11.34% |
Oils and Energy |
-35.08% |
36.41% |
34.42% |
20.50% |
Consumer Discretionary |
-30.22% |
44.44% |
21.59% |
20.32% |
Construction |
-5.06% |
47.83% |
20.50% |
11.93% |
Transportation |
-15.44% |
22.51% |
18.95% |
16.05% |
Computer and Tech |
1.35% |
15.95% |
16.05% |
14.32% |
Finance |
- to + |
319.28% |
13.43% |
22.49% |
Business Service |
- to + |
1457.95% |
13.32% |
17.22% |
Retail/Wholesale |
-23.60% |
11.23% |
12.17% |
18.05% |
Conglomerates |
- to - |
- to + |
11.35% |
53.15% |
Consumer Staples |
2.61% |
14.65% |
10.81% |
13.89% |
Medical |
5.79% |
11.72% |
9.03% |
9.56% |
Auto |
2.53% |
10.40% |
5.68% |
5.76% |
Utilities |
-13.47% |
-0.86% |
3.67% |
5.97% |
Aerospace |
-16.75% |
21.02% |
2.20% |
15.63% |
S&P |
2.04% |
45.85% |
17.03% |
13.59% |
Annual Total Revenue Growth
- Total S&P 500 Revenue in 2010 rises 7.80% above 2009
levels, a rebound from a 6.68% 2009 decline.
- Total revenues for the S&P 500 expected to rise 5.84% in
2011, 6.37% in 2012.
- Energy to lead revenue race in 2011. Six other sectors (all
cyclical) also expected to show double digit revenue growth in
2011.
- All sectors but Staples and Finance expected to show positive
top-line growth in 2011, but four sectors expected to show positive
growth below 5%. All sectors see 2012 growth, three in double
digits.
- Aerospace the only sector to post lower top line for 2010.
Revenues for Financials were virtually unchanged.
- Four sectors expected to post double-digit top line growth in
2012, led by Construction and Industrials. No sector expected to
post falling revenues.
- Revenue growth significantly different if Financials are
excluded, down 10.46% in 2009 but growth of 9.19% in 2010, 9.97% in
2011, and 5.88% in 2012.
Annual Total Revenue Growth
|
Sales Growth |
2009 |
2010 |
2011 |
2012 |
Oils and Energy |
-34.41% |
23.15% |
23.11% |
7.04% |
Basic Materials |
-19.30% |
12.78% |
16.42% |
5.72% |
Industrial Products |
-20.96% |
12.34% |
15.33% |
11.98% |
Transportation |
7.25% |
10.83% |
12.96% |
10.71% |
Consumer Discretionary |
-4.95% |
3.93% |
12.92% |
7.32% |
Auto |
-21.40% |
8.53% |
11.62% |
9.53% |
Computer and Tech |
-10.42% |
15.36% |
10.29% |
10.11% |
Business Service |
-2.43% |
5.99% |
6.33% |
6.69% |
Utilities |
-5.84% |
2.46% |
5.81% |
2.89% |
Retail/Wholesale |
1.40% |
4.08% |
5.65% |
6.02% |
Medical |
6.25% |
11.37% |
4.35% |
2.63% |
Construction |
-15.92% |
0.47% |
4.26% |
12.12% |
Conglomerates |
-13.30% |
0.94% |
2.18% |
4.89% |
Aerospace |
6.51% |
-0.34% |
1.07% |
6.21% |
Consumer Staples |
-0.36% |
4.77% |
-2.07% |
5.17% |
Finance |
21.51% |
0.10% |
-15.24% |
5.40% |
S&P 500 |
-6.69% |
7.80% |
5.84% |
6.37% |
Excluding Financial |
-10.46% |
9.19% |
9.97% |
5.88% |
Annual Net Margins
- Net Margins marching higher, from 5.88% in 2008 to 6.39% in
2009 to 8.65% for 2010, 9.51% expected for 2011. Trend expected to
continue into 2012 with net margins of 10.21% expected. Major
source of earnings growth.
- Financials significantly distort overall net margins. Net
margins ex-Financials 7.78% in 2008, 7.08% in 2009, 8.28% for 2010,
8.87% expected in 2011. Expected to grow to 9.36% in 2012.
- Financials net margins soar from -8.42% in 2008 to 16.87%
expected for 2012.
- All sectors but Medical and Utilities saw higher net margins in
2010 than in 2009. All sectors but Utilities expected to post
higher net margins in 2011 than in 2010. Widespread margin
expansion currently expected for 2012 as well with all sectors
expected to post expansion in margins.
- Seven sectors to boast double-digit net margins in 2012, up
from just three in 2009.
- Sector net margins are calculated as total net income for
sector divided by total revenues. However, there are generally
fewer revenue estimates than earnings estimates for individual
companies.
Annual Net Margins
|
Net Margins |
2009A |
2010E |
2011E |
2012E |
Computer and Tech |
11.86% |
15.20% |
16.32% |
16.89% |
Finance |
2.59% |
10.85% |
14.51% |
16.87% |
Medical |
13.17% |
13.06% |
13.22% |
13.63% |
Business Service |
10.78% |
11.80% |
12.76% |
13.80% |
Consumer Staples |
9.85% |
10.50% |
11.60% |
12.18% |
Conglomerates |
8.19% |
9.02% |
9.91% |
11.15% |
Consumer Discretionary |
7.50% |
8.84% |
9.20% |
10.07% |
Oils and Energy |
6.27% |
7.65% |
8.66% |
9.01% |
Industrial Products |
6.15% |
7.46% |
8.59% |
9.36% |
Basic Materials |
4.47% |
6.82% |
8.27% |
8.87% |
Transportation |
5.83% |
7.59% |
8.01% |
8.88% |
Utilities |
8.36% |
8.09% |
7.92% |
8.16% |
Aerospace |
5.04% |
6.12% |
6.19% |
6.73% |
Auto |
0.36% |
5.23% |
5.31% |
5.68% |
Retail/Wholesale |
3.06% |
3.37% |
3.51% |
3.80% |
Construction |
-0.51% |
2.68% |
2.86% |
3.91% |
S&P 500 |
6.39% |
8.65% |
9.51% |
10.21% |
Excluding Financials |
7.08% |
8.28% |
8.87% |
9.36% |
Earnings Estimate Revisions: Current Fiscal Year
The Zacks Revisions Ratio: 2011
- Revisions ratio for full S&P 500 at 0.87, down from 1.09
two weeks ago -- still a neutral reading. Nearing seasonal low in
activity, meaning changes are driven more by old estimates falling
out than new estimates being added (lowering significance of
revisions ratio).
- Medical only sector with revisions ratio above 2.0. Transports
and Business Service also strong. Construction, Conglomerates and
Finance weak. Seven sectors with positive revisions ratios, eight
negative (below 1.0). Many sector sample sizes very small.
- Ratio of firms with rising to falling mean estimates at 1.09,
down from 1.33, now a neutral reading.
- Total number of revisions (4-week total) plunging at 1,287,
down from 1,379 two weeks ago (-6.7%), and down from 5068 at height
of earnings season.
- Increases at 599 down from 720 (-16.8%), cuts at 688, up from
659 (+4.4%).
The Zacks Revisions Ratio: 2011
|
Sector |
%Ch
Curr Fiscal Yr
Est - 4 wks |
#
Firms
Up |
#
Firms
Down |
#
Ests
Up |
#
Ests
Down |
Revisions
Ratio |
Firms
up/down |
Medical |
0.22 |
26 |
16 |
51 |
15 |
3.40 |
1.63 |
Transportation |
0.69 |
4 |
5 |
31 |
16 |
1.94 |
0.80 |
Business Service |
0.07 |
8 |
8 |
19 |
10 |
1.90 |
1.00 |
Retail/Wholesale |
-1.69 |
23 |
21 |
103 |
55 |
1.87 |
1.10 |
Basic Materials |
0.15 |
15 |
6 |
26 |
18 |
1.44 |
2.50 |
Aerospace |
-0.01 |
1 |
5 |
5 |
4 |
1.25 |
0.20 |
Industrial Products |
-0.20 |
13 |
8 |
22 |
19 |
1.16 |
1.63 |
Auto |
0.03 |
3 |
3 |
9 |
9 |
1.00 |
1.00 |
Oils and Energy |
-0.66 |
19 |
18 |
72 |
74 |
0.97 |
1.06 |
Consumer Discretionary |
-0.83 |
15 |
11 |
28 |
39 |
0.72 |
1.36 |
Computer and Tech |
-0.98 |
28 |
24 |
72 |
101 |
0.71 |
1.17 |
Utilities |
0.12 |
19 |
15 |
23 |
33 |
0.70 |
1.27 |
Consumer Staples |
-0.39 |
15 |
11 |
24 |
44 |
0.55 |
1.36 |
Finance |
-1.07 |
26 |
45 |
106 |
229 |
0.46 |
0.58 |
Conglomerates |
0.03 |
5 |
3 |
2 |
5 |
0.40 |
1.67 |
Construction |
-2.34 |
4 |
6 |
6 |
17 |
0.35 |
0.67 |
S&P |
-0.60 |
224 |
205 |
599 |
688 |
0.87 |
1.09 |
Earnings Estimate Revisions: Next Fiscal Year
The Zacks Revisions Ratio: 2012
- Revisions ratio for full S&P 500 at 0.95, down from 1.18
two weeks ago -- still in neutral territory.
- Three sectors have at least two increases per cut. Transports
and Medical lead. Sample sizes very small for man sectors, lowering
significance.
- Seven sectors with negative revisions ratio (below 1.0).
Construction and Finance especially weak.
- Ratio of firms with rising estimate to falling mean estimates
at 1.07, down from 1.31 -- in neutral territory.
- Total number of revisions (4-week total) at 1,223, down from
1,363 two weeks ago (-10.3%), and from 4,571 at seasonal peak.
- Increases at 597 down from 738 last week (-19.1%), cuts rise to
626 from 625 last week (+0.0%).
The Zacks Revisions Ratio: 2012
|
Sector |
%Ch
Next Fiscal Yr Est - 4 wks |
#
Firms Up |
#
Firms Down |
#
Ests Up |
#
Ests Down |
Revisions
Ratio |
Firms up/down |
Transportation |
1.05 |
5 |
3 |
24 |
7 |
3.43 |
1.67 |
Medical |
0.39 |
24 |
16 |
62 |
28 |
2.21 |
1.50 |
Business Service |
0.04 |
10 |
6 |
19 |
9 |
2.11 |
1.67 |
Retail/Wholesale |
0.28 |
30 |
14 |
96 |
61 |
1.57 |
2.14 |
Basic Materials |
0.68 |
13 |
8 |
22 |
15 |
1.47 |
1.63 |
Industrial Products |
0.30 |
12 |
9 |
24 |
19 |
1.26 |
1.33 |
Oils and Energy |
0.35 |
20 |
17 |
72 |
59 |
1.22 |
1.18 |
Aerospace |
-0.02 |
3 |
3 |
7 |
6 |
1.17 |
1.00 |
Consumer Staples |
-0.09 |
17 |
13 |
26 |
25 |
1.04 |
1.31 |
Consumer Discretionary |
-0.23 |
12 |
15 |
29 |
35 |
0.83 |
0.80 |
Auto |
-0.55 |
4 |
3 |
6 |
8 |
0.75 |
1.33 |
Utilities |
-0.04 |
17 |
20 |
31 |
42 |
0.74 |
0.85 |
Conglomerates |
0.05 |
4 |
3 |
2 |
3 |
0.67 |
1.33 |
Computer and Tech |
-0.67 |
26 |
27 |
62 |
97 |
0.64 |
0.96 |
Finance |
-0.35 |
23 |
46 |
106 |
192 |
0.55 |
0.50 |
Construction |
-0.84 |
4 |
7 |
9 |
20 |
0.45 |
0.57 |
S&P |
-0.05 |
224 |
210 |
597 |
626 |
0.95 |
1.07 |
Total Income and Share
- S&P 500 earned $544.3 billion in 2009, rising to earn
$793.8 billion in 2010, $928.9 billion expected in 2011.
- Early expectations that the S&P 500 total earnings will hit
the $1 Trillion mark in 2012 at $1.055 Trillion.
- Finance share of total earnings moves from 5.9% in 2009 to
17.8% in 2010, 17.3% expected for 2011; 18.6% in 2012, but still
well below 2007 peak of over 30%. Energy share also rising, going
from 11.9% in 2009 to 14.3% in 2012.
- Medical share of total earnings far exceeds market cap share
(index weight), but earnings share expected to shrink from 17.3% in
2009 to 10.8% in 2012, down each year.
- Market Cap shares of Construction, Staples, Retail,
Transportation, Industrials and Business Service sectors far exceed
earnings shares of any of the years from 2010 through 2012.
- Earnings shares of Energy, Finance, and Medical well above
market cap shares.
- As a general rule, one should try to overweight sectors with
rising earnings shares, underweight falling earnings shares, but
also overweight sectors where earnings shares exceed market cap
shares.
Total Income and Share
|
Income ($ Bill) |
Total
Net
Income
$ 2010 |
Total
Net
Income
$ 2011 |
Total
Net
Income
$ 2012 |
% Total
S&P Earn
2010 |
% Total
S&P Earn
2011 |
% Total
S&P
Earn
2012 |
% Total
S&P Mkt
Cap |
Finance |
$134,561 |
$162,141 |
$181,487 |
16.95% |
17.45% |
17.20% |
17.48% |
Computer and Tech |
$141,470 |
$160,465 |
$196,557 |
17.82% |
17.27% |
18.63% |
15.51% |
Oils and Energy |
$97,365 |
$135,804 |
$151,200 |
12.27% |
14.62% |
14.33% |
12.04% |
Medical |
$101,509 |
$107,276 |
$113,454 |
12.79% |
11.55% |
10.75% |
10.46% |
Consumer Staples |
$62,796 |
$68,464 |
$75,007 |
7.91% |
7.37% |
7.11% |
8.50% |
Retail/Wholesale |
$59,474 |
$65,906 |
$75,063 |
7.49% |
7.09% |
7.11% |
8.67% |
Utilities |
$49,924 |
$51,759 |
$54,850 |
6.29% |
5.57% |
5.20% |
6.18% |
Conglomerates |
$23,171 |
$32,750 |
$37,099 |
2.92% |
3.53% |
3.52% |
3.34% |
Consumer Discretionary |
$28,658 |
$32,147 |
$37,950 |
3.61% |
3.46% |
3.60% |
3.82% |
Basic Materials |
$26,440 |
$31,451 |
$36,500 |
3.33% |
3.39% |
3.46% |
4.15% |
Industrial Products |
$16,841 |
$22,638 |
$27,280 |
2.12% |
2.44% |
2.59% |
2.76% |
Aerospace |
$12,714 |
$14,754 |
$16,867 |
1.60% |
1.59% |
1.60% |
2.01% |
Business Service |
$14,143 |
$14,454 |
$16,714 |
1.78% |
1.56% |
1.58% |
1.47% |
Transportation |
$11,686 |
$14,208 |
$17,095 |
1.47% |
1.53% |
1.62% |
1.94% |
Auto |
$11,090 |
$12,567 |
$14,731 |
1.40% |
1.35% |
1.40% |
1.13% |
Construction |
$1,936 |
$2,156 |
$3,302 |
0.24% |
0.23% |
0.31% |
0.54% |
S&P 500 |
$793,778 |
$928,940 |
$1,055,156 |
100.00% |
100.00% |
100.00% |
100.00% |
P/E Ratios
- Trading at 15.85x 2010, 13.55x 2011 earnings, or earnings
yields of 6.31% and 7.38%, respectively. P/E for 2012 at
11.93x or earnings yield of 8.38%.
- Earnings Yields still very attractive relative to 10-year
T-Note rate of 3.18%.
- Autos have lowest P/E based on 2012 earnings. Energy lowest on
2011. Financials also in single digits for 2012.
- Construction has highest P/E for all three years, but falling
fast.
- Auto and Finance high 2009 P/Es to fall dramatically in 2010
and 2011, continue down in 2012.
- S&P 500 earned $57.12 in 2009 rising to $83.32 in 2010.
Currently expected to earn $97.46 in 2011 and $110.70 for
2012.
P/E Ratios
|
P/E |
2009 |
2010 |
2011 |
2012 |
Oils and Energy |
23.4 |
15.6 |
11.2 |
10.0 |
Auto |
199.4 |
12.8 |
11.3 |
9.6 |
Finance |
57.8 |
13.8 |
12.2 |
9.9 |
Medical |
14.3 |
13.0 |
12.3 |
11.6 |
Aerospace |
15.8 |
13.1 |
12.8 |
11.1 |
Basic Materials |
31.3 |
18.2 |
12.8 |
11.3 |
Computer and Tech |
24.2 |
16.4 |
13.6 |
12.1 |
Conglomerates |
18.7 |
16.8 |
14.9 |
12.7 |
Utilities |
15.5 |
15.6 |
15.0 |
14.2 |
Industrial Products |
28.2 |
20.7 |
15.4 |
12.8 |
Consumer Staples |
19.0 |
17.0 |
15.6 |
14.3 |
Retail/Wholesale |
21.0 |
18.3 |
16.6 |
14.5 |
Consumer Discretionary |
24.2 |
19.8 |
16.6 |
14.3 |
Business Service |
23.1 |
19.9 |
17.2 |
15.0 |
Transportation |
30.2 |
20.9 |
17.2 |
14.3 |
Construction |
NM |
34.9 |
31.4 |
20.5 |
S&P 500 |
23.12 |
15.85 |
13.55 |
11.93 |
FY1 Revisions of More than 5%
The first table below shows the S&P 500 firms with the biggest
increases in their FY1 (mostly 2010) mean estimate over the last 4
weeks. The second shows the largest declines. To qualify there must
be more than 3 estimates for FY1, and have a mean estimate of more
than $0.50. In addition to the change in the mean estimate, the net
percentage of estimates being raised is shown for both FY1 and FY2,
as well as the P/E ratios based on each year’s earnings is
shown.
Note that estimate momentum and value are not mutually exclusive.
The most interesting of these firms will be where the net revisions
percentage (#up-#dn/Tot) is more than 0.50 but less than 1.00. Big
mean estimate changes based on a handful of individual revisions
are suspect, but could prove to be the most interesting if other
analysts follow suit. On the other hand if all the analysts have
raised their estimates already, the mean estimate is less likely to
rise again over the next month.
- This week’s cut off +/- 5%, 4 make increase cut, 16 make
decrease cut
- 2 increases greater than 10%, 6 decreases
- Financials dominate the decrease list
Biggest FY1 Revisions(Largest Increases)
|
Company |
Ticker |
%Ch
Curr Fiscal Yr Est - 4 wks |
%Ch
Next Fiscal Yr Est - 4 wks |
# Up-Dn/Tot
%Ch
Curr Fiscal Yr Est - 4 wks |
# Up-Dn/Tot
%Ch
Next Fiscal Yr Est - 4 wks |
P/E using
Curr FY Est |
P/E using
Next FY Est |
Amer Intl Grp |
AIG |
12.44% |
1.34% |
0.00 |
0.00 |
7.83 |
9.28 |
Discover Fin Sv |
DFS |
26.88% |
14.67% |
0.93 |
0.94 |
7.63 |
9.07 |
Joy Global Inc |
JOYG |
5.50% |
6.79% |
0.75 |
0.80 |
17.03 |
14.01 |
Red Hat Inc |
RHT |
5.92% |
3.28% |
0.86 |
0.42 |
61.51 |
51.70 |
Biggest FY1 Revisions(Largest Declines)
|
Company |
Ticker |
%Ch
Curr Fiscal Yr Est - 4 wks |
%Ch
Next Fiscal Yr Est - 4 wks |
# Up-Dn/Tot
%Ch
Curr Fiscal Yr Est - 4 wks |
# Up-Dn/Tot
%Ch
Next Fiscal Yr Est - 4 wks |
P/E using
Curr FY Est |
P/E using
Next FY Est |
Bank Of Amer Cp |
BAC |
-51.03% |
-0.87% |
-0.55 |
-0.19 |
21.20 |
6.56 |
Travelers Cos |
TRV |
-31.17% |
-3.60% |
-1.00 |
-0.74 |
13.69 |
9.74 |
Allstate Corp |
ALL |
-29.73% |
-0.28% |
-0.89 |
-0.19 |
23.32 |
8.23 |
Cincinnati Finl |
CINF |
-24.52% |
-0.89% |
-0.67 |
-0.17 |
49.53 |
19.58 |
Alpha Natrl Res |
ANR |
-12.35% |
-0.81% |
-0.33 |
0.00 |
10.78 |
7.38 |
Owens-Illinois |
OI |
-10.97% |
-6.40% |
-0.78 |
-0.67 |
10.48 |
8.27 |
Lennar Corp -A |
LEN |
-9.34% |
-3.98% |
-0.31 |
-0.20 |
34.59 |
19.45 |
Morgan Stanley |
MS |
-7.90% |
-4.60% |
-0.23 |
-0.50 |
11.78 |
8.31 |
Xl Group Plc |
XL |
-7.43% |
-0.29% |
-0.60 |
-0.06 |
20.33 |
10.50 |
Natl Semicon |
NSM |
-7.31% |
-0.88% |
-0.65 |
-0.31 |
21.25 |
18.37 |
Sunoco Inc |
SUN |
-7.05% |
1.15% |
-0.27 |
0.08 |
48.90 |
17.86 |
Nabors Ind |
NBR |
-6.57% |
-2.51% |
-0.62 |
-0.32 |
16.00 |
10.25 |
Rowan Cos Inc |
RDC |
-6.05% |
0.96% |
-0.20 |
-0.13 |
19.17 |
10.34 |
Newell Rubbermd |
NWL |
-5.97% |
-6.39% |
-1.00 |
-0.86 |
10.15 |
9.14 |
Chubb Corp |
CB |
-5.42% |
-0.03% |
-0.85 |
-0.10 |
11.92 |
10.76 |
Goldman Sachs |
GS |
-5.05% |
-4.32% |
-0.40 |
-0.38 |
9.98 |
7.43 |
Data in this report, unless stated otherwise, is through the
close on Thursday 6/30/2011.
We use the convention of referring to the next full fiscal year to
be completed as 2011, not all firms are on December fiscal years,
this can cause discontinuities in the data. The data is based on
FY1, not based on 2011, even though I may call it 2011 in the
report. All numbers, including historical ones, reflect the current
composition of the S&P 500, thus some historical numbers may
differ from those reported by S&P which are based on the
composition of the index at the time of the reports.
AMER INTL GRP (AIG): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis Report
DISCOVER FIN SV (DFS): Free Stock Analysis Report
JOY GLOBAL INC (JOYG): Free Stock Analysis Report
RED HAT INC (RHT): Free Stock Analysis Report
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