Posts filed under “Analysts”

Surprisingly Strong Q4 2010 Revenues

One of the knocks on last year’s earnings was that it was cost cutting was driving profitibility — not organic revenue growth. The recovery could not turn into an expansion, we were told, without solid revenue gains. Earnings may have surpassed Wall Street expectations for seven straight quarters, but sales have trailed forecasts since 2008. And there is only so far you can “cut your way to prosperity.”

Which makes the latest S&P500 sales data encouraging: “More U.S. companies are exceeding sales forecasts than any time in four years, helping extend the biggest stock-market rally since 1936.”

In Q4 2010, 71% of Standard & Poor’s 500 companies are reporting more revenue than analysts estimated. This is the largest proportion since 2006. Sales beat projections by an average 2.2% — the most in two years.

And the forecasts are even stronger. Here’s Bloomie:

“Total revenue for S&P 500 companies may rise 7.5 percent this year, the most since 2007, to an all-time high of $1,017.44 a share, according to analyst estimates compiled through Feb. 6 by Bloomberg. Sales fell 13 percent between November 2008 and October 2009 as the worst U.S. recession since the 1930s forced businesses and consumers to cut back on spending . . .Since the start of the third quarter of 2008, when Lehman Brothers Holdings Inc. filed the largest bankruptcy in U.S. history, sales for S&P 500 companies have missed estimates by an average of 0.1 percent, while earnings have surpassed forecasts by 2.9 percent, data compiled by Bloomberg show. The fourth quarter was the first time since 2008 that the average sales surprise reached 2 percent, the data show.”

One caveat: Analysts tend to extrapolate out to infinity. AT tops they are too bullish, at bottoms they are too bearish. Hence, there forecasts catching up to reality is not always cause for celebration.

Still, the actual sales is a data point that the cyclical analysts have been forecasting. The cycles seem to be still painting the broad overview more accurately than anything else . . .

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Source:
S&P 500 Beating Estimates for Sales by Most Since 2006
Whitney Kisling and Lynn Thomasson
Bloomberg, Feb. 7 2011 
http://noir.bloomberg.com/apps/news?pid=20601109&sid=a8z.YNrvluXw&pos=11

Category: Analysts, Cycles, Data Analysis, Economy

Merrill Lynch’s Horrific Irish Bank Adventures

In Friday’s reading, I mentioned Michael Lewis’s piece in Vanity Fair: When Irish Eyes Are Crying. It is your must read of the weekend. The problems in Ireland makes the woes in Greece look merely like a bounced check. And Ireland’s eejit politicians, FOLLOWING THE ADVICE OF MERRILL LYNCH, turned the entire population of the…Read More

Category: Analysts, Bailouts, Really, really bad calls

Time to Defang Moody’s and S&P

“Fundamental Analysts: You don’t need them in a Bull market, and you don’t want them in a Bear market.” > I started out in this business on a trading desk. The head of trading who trained me was a crusty no bullshit former Marine Jungle Combat Instructor. He was not keen on Fundamental Analysts, and…Read More

Category: Analysts, Bailouts, Regulation

It appears that the web editors at the AEI have been busy. Peter Wallison, currently a member of the Financial Crisis Inquiry Commission, was also the co-director of AEI’s Financial Deregulation Project, along with his co-director, Columbia professor Charles Calomoris. Over at Calomoris’s bio, his status as co-director of AEI’s Financial Deregulation Project is the…Read More

Category: Analysts, Bailouts, Credit, Politics, Real Estate

Yahoo Finance + StockTwits = Message Boards 2.0

Two firms I have more than a passing relationship — Yahoo Finance and StockTwits — have formally announced a deal to place the curated StockTwit content directly onto Yahoo Finance. (I am a regular on Yahoo Finance, and FusionIQ offers several products in the stock twits marketplace). Lets use Google as an example of what…Read More

Category: Analysts, Trading, Web/Tech

Top Economic Forcasters

Here are Bloomberg’s run of Wall Street’s top economic prognosticators. Click to open PDFs • Top Personal Spending Forecasters • Top Unemployment Forecasters • Top GDP Forecasters • Top CPI Forecasters • Top Overall Forecasters Yes, I know that calling someone a top Wall Street’s top economist is like saying they are the skinniest guy…Read More

Category: Analysts

WSJ: Expert Networks = Insider Trading

The WSJ occasionally buries huge stories in its much less read weekend edition; recall the option backdating investigation in 2006. This past weekend was a classic example of this: “Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation, according…Read More

Category: Analysts, Legal, M&A

Tight Employers: Frugal or Counter-Productive?

Have a quick look at yesterday’s post: Wedbush: Cheap as a Fox. There was a robust discussion in comments — and the general take that resonated with me was summed up thusly: Being judicious about expenses is one thing, but being ultra cheap can be counter-productive and myopic when you figure in the opportunity costs….Read More

Category: Analysts, Corporate Management, Wages & Income

Home Equity as a Percentage of Household Net Worth

> I frequently find myself disagreeing with Tobias Levkovich of Citigroup. That’s not surprising, given his firm and their investment posture. Where I really part ways is on anything housing related. Levkovich was part of the mainstream herd of strategists who, as the markets topped in October 2007, made the erroneous forecast that Housing would…Read More

Category: Analysts, Real Estate, Really, really bad calls

Regulation AB: Downgrading the Ratings Agencies

We know the major ratings agencies suck. We know their business model was payola. We know they sold ratings for cash, committed fraud on structured product investors. We know they hid significant modeling errors, and then hid these problems from the public and regulators. Might their free ride be coming to an end? The SEC…Read More

Category: Analysts, Bailouts, Credit, Legal, Really, really bad calls