Posts filed under “Earnings”

Do You See the Positives or Negatives?

The Standard & Poor’s 500 Index hit an all-time high yesterday, closing at 1,897.45. The Dow Jones Industrial Average also hit a record, ending at 16,715.44. This should be tempered by noting that the Dow is up less than 1 percent so far this year, while the S&P 500 has gained about 2.7 percent. One big down day can erase all gains for the year.

The small-cap Russell 2000 Index has been playing the spoiler, failing to reach new highs. Perhaps this is less surprising, after last years’ blistering 38 percent gain for the Russell, and 43 percent run-up for its growth index. No one expects new records anytime soon from the Nasdaq Composite Index. It is up about fourfold from its 2002 low, but still is almost 20 percent below its peak more than 14 years ago.

Each new set of highs seems to be greeted with derision and skepticism. The evidence shows that new highs are bullish, but that seems not to matter very much to the skeptics. The U.S. economy is the cleanest shirt in the dirty hamper. Year-over-year increases in corporate revenues and better-than-expected earnings should also give investors a reasonable basis for anticipating equity gains.

This morning, I want to take a quick look at what is bullish and bearish for stock markets.   continues here

 

Category: Data Analysis, Earnings, Psychology, Sentiment, Valuation

Why ‘Peak-Earnings Models’ Are Nonsense

Lately, there has been a spate of research, analysis and commentary telling us that earnings are at a cyclical high and must revert. Stock valuations, therefore, are elevated and earnings will soon begin to fall, bringing stocks down with them. This is neither a credible analysis nor a method of valuing equities. Rather, it is…Read More

Category: Earnings, Investing, Really, really bad calls, Valuation

Forecast 2014: “Mark Twain!”

Forecast 2014: “Mark Twain!”
By John Mauldin
January 18, 2014

 

 

It’s All About the Earnings
The Trouble with Earnings
What Would Yellen Do?
Forecast 2014: “Mark Twain!”
Argentina, Vancouver, Edmonton, Regina, and Home

 

Piloting on the Mississippi River was not work to me; it was play — delightful play, vigorous play, adventurous play – and I loved it…

– Mark Twain

 

In the 1850s, flat-bottom paddlewheel steamboats coursed up and down the mighty Mississippi, opening up the Midwest to trade and travel. But it was treacherous travel. The current was constantly shifting the sandbars underneath the placid, smoothly rolling surface of the river. What was sufficient depth one week on a stretch of the river might become a treacherous sandbar the next, upon which a steamboat could run aground, perhaps even breaching the hull and sinking the ship. To prevent such a catastrophe, a crewman would throw a long rope with a lead weight at the end as far in front of the boat as possible (and thus the crewman was called the leadman). The rope was usually twenty-five fathoms long and was marked at increments of two, three, five, seven, ten, fifteen, seventeen and twenty fathoms. A fathom was originally the distance between a man’s outstretched hands, but since this could be quite imprecise, it evolved to be six feet.

The leadsman would usually stand on a platform, called “the chains,” which projected from the ship over the water, and “sound” from there. A typical sound would be expressed as “By the mark 7,” or whatever the depth was. In modern English language, it is interesting to note that the expression “deep six,” refers to this old method of measuring water. On the Mississippi River in the 1850s, the leadsmen also used old-fashioned words for some of the numbers; for example instead of “two” they would say “twain”. Thus when the depth was two fathoms, they would call “by the mark twain!” (bymarktwain.com)

And thus a young Samuel Clemens, apprentice Mississippi riverboat pilot, would take the “soundings” and from time to time would sing out the depth of two fathoms as “By the mark twain!” We think that is how he found his pen name. In Life on the Mississippi, Mark Twain describes sounding: “Often there is a deal of fun and excitement about sounding, especially if it is a glorious summer day, or a blustering night. But in winter the cold and the peril take most of the fun out of it.”

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Category: Earnings, Think Tank

Always Low Wages? Wal-Mart’s Other Choices

Yesterday, we looked at the benefit to McDonald’s of having its workers subsidized by state and federal aid. Today, its Wal-Mart’s turn. Recall our discussion last month on the related subject of “How McDonald’s and Wal-Mart Became Welfare Queens.” We learned that employees of these two companies are often the largest recipients of aid in…Read More

Category: Earnings, Retail, Wages & Income

Profitibility at the World’s Biggest Tech Firms

  click for ginormous graphic via Pando Daily  

Category: Digital Media, Earnings, Technology, Valuation

Corporate Profits After Tax

Billions of dollars, seasonally adjusted, after tax without inventory valuation (IVA) and capital consumption adjustments (CCAdj). Source: FRED   I have been trying to explain to some of my more Fed obsessed friends there are factors outside the central bank that matter also. One such factor is corporate profits. As the chart from the Federal Reserve…Read More

Category: Data Analysis, Earnings, Federal Reserve

Apple’s Rebound Q in One Giant Chart

click for larger graphic Source: TechCrunch

Category: Digital Media, Earnings, Valuation

Lagged P/E Ratios: Shiller Cape vs NIPA

click for ginormous charts Source: JP Morgan   JP Morgan observes: “Shiller P/E shows the market to be overvalued, but not as extreme if you use the NIPA data.” I’ve never used the NIPA data, so I have no real opinion on it.  The two charts look directionally similar, but different in terms of magnitude….Read More

Category: Data Analysis, Earnings, Valuation

How Future Growth Impacts Current Equity Valuations

More fun with price-to-earnings ratios: Earlier this month, we looked at the question of whether Stocks were Cheap or Expensive. That was a follow up to our glance at how much Earnings and Equities had rallied off the 2009 lows. The problem is the many ways we can define earnings-per-share. Do we use analysts’ forward…Read More

Category: Earnings, Valuation

Surprise! 2Q Sales Growth = +2.7%

click for larger graphic Source: Merrill Lynch Research     We interrupt the upcoming economic apocalypse and market collapse for this surprising message. Earnings are being revised higher, as are Revenues as well. Merrill Lynch, who tracks these sorts of things, notes that the latest revised expectations for Q2 are “1.3% higher than they were…Read More

Category: Earnings, Valuation