Posts filed under “Earnings”

Worst. Idea. Ever.

Every now and then a remarkably bad idea springs to life. It gets debated, ridiculed and eventually discarded. In the marketplace of ideas, free and open debate help to determine which ideas are useful and which wind up in the rubbish heap. (John Stuart Mill was onto something). We tolerate reprehensible ideas because, ultimately, free speech leads society toward a greater truth.

Today’s column is about a concept so misguided and ill-conceived that it cries out for a debunking.

The idea is that publicly traded corporations should stop reporting their quarterly financial resultsMoneybeat reported that the idea originated in the U.K., with Legal & General Investment Management, which manages $1.1 trillion in assets.  Legal & General, according to the report, “contacted the boards of the largest 350 companies on the London Stock Exchange supporting a move away from quarterly reports.” That idea is now being championed in the U.S. by Martin Lipton and Sebastian Niles, both of the law firm Wachtell Lipton.

Before we dissect the problems with this proposal, let’s acknowledge upfront that there are many legitimate problems related to the quarterly earnings dance. It gives some companies an excessive incentive to disproportionately focus on short-term results. The pressure to game accounting can be overwhelming, and the way many companies use and abuse financial reporting is laughable. Longer-term capital expenditures, research and development, and investing can get neglected for fear it might hurt the quarterly numbers. Ignoring the long term leads to ill-advised acquisitions, needless firings and relentless obsession with cost cutting. Short termism certainly underlies the current practice of borrowing money to buy back shares.

 

Continues at: Wrong Fix for Short-Term Corporate Thinking

 

Category: Analysts, Corporate Management, Earnings, Really, really bad calls, Regulation

As Goes Apple, So Goes the Market?

With the stock markets down almost (OMG!) 5 percent from their all-time highs, lots of folks are looking for signs that the bull is dying, if not dead. One of the more portentous omens is the recent decline and volatility of Apple’s stock. Or so it seems. For reasons too numerous to list here, Apple…Read More

Category: Corporate Management, Earnings, Economy, Psychology, Really, really bad calls

Actual vs. Estimated Earnings Growth 2005-2015

Reporting for second quarter earnings are ramping up. Two great informative charts from FactSet show Change in EPS and Estimates vs. Actual Earnings Growth:       Source: FactSet

Category: Earnings, Markets

Long Term Drivers of Economic Growth & Profits

My favorite quarterly chart book is out. These few charts caught my eye:

 

click for much larger charts

 

 
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Category: Earnings, Economy, Markets, Valuation

Is The Only Purpose of a Corporation to Maximize Profit?

I am pleased to introduce to Big Picture readers someone I have known and admired for many years: Bruce Bartlett worked for Congressmen Ron Paul and Jack Kemp, and in the Office of Policy Development in the Reagan White House, and at the Treasury Department for George H.W. Bush. He is now a political independent….Read More

Category: Earnings, Really, really bad calls

Always a ‘Great Quarter, Guys!

It’s Always a ‘Great Quarter, Guys!’ If You’re an Equity Analyst Source: Bloomberg    

Category: Analysts, Earnings

Apple’s Q Reveals the Perils of Earnings Predictions

Apple’s first-quarter earnings were blow-out numbers. Far beyond what anyone forecast, the figures show Apple arguably had the single-greatest quarterly performance in U.S. corporate history. A quick overview: Apple’s net profit of $18 billion is an astonishing gain of 38 percent over the already-huge $13.1 billion in the same quarter last year. (So much for…Read More

Category: Analysts, Earnings, Technology

Look Out Below, fill-in-the-blank edition!

Markets were under intense pressure earlier today, with the Dow Jones Industrial Average down almost 400 points. Most indexes were down 2 percent or so around the globe before recovering some of the losses. As is often the case during big market swings, numerous narratives attempt to explain the causes of the market turmoil. Consider…Read More

Category: Earnings, Economy, Markets

Best earnings growth in three years

 

Continues here

 

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Category: Earnings

Earnings Disappointments vs Stock prices

Source: The Reformed Broker

Category: Earnings, Markets