Posts filed under “Earnings”

Meb Faber: Buy Cheap Cyclically Adjusted P/E (CAPE)

Cyclically Adjusted P/E
Click to enlarge:



Meb Faber of Cambria Investment Management looks at 10 years of earnings. Based on a methodology developed by Yale University Professor Robert J. Shiller, Faber concluded from an analysis of cyclically adjusted price-earnings ratios, designed to minimize the effect of economic swings on profits.

Cyclically adjusted P/E, also known as CAPE, for U.S. stocks since 1900. The figures were obtained from Shiller’s Yale website, where they are available from 1881 onward.

The U.S. was among 32 markets examined in Faber’s study

Investing in markets whose ratios were in the bottom third at the start of each year would have produced inflation-adjusted annual returns that beat the global average by four to seven percentage points. Markets with ratios in the top third trailed by a comparable amount.

The results point to “significant outperformance by selecting markets based on relative and absolute valuation,” Buying only when CAPE was below 15 and shunning markets with ratios higher than 30 led to higher returns, the research showed.




Chart of the Day
By David Wilson
Bloomberg August 23, 2012

Category: Earnings, Quantitative, Technical Analysis, Valuation

Stocks Near 5-Year Highs Despite Worst Earnings Season Since 2009

Source: Yahoo

Category: Earnings, Video

The Dismal Earnings Season

The Wall Street Journal – U.S. Profit Streak Hit by Global Weakness Bid adieu to growing profits. Slowing economies from the U.S. to China, increasingly wary shoppers, recession in much of Europe and a stronger dollar could bring to an end at least 10 continuous quarters of profit growth for America’s biggest companies. Until Friday,…Read More

Category: Earnings, Think Tank

Earnings vs. Stock Returns

MarketWatch – Good news: Earnings growth is slowing Worried that lower earnings growth will lead to a bear market? You’re not alone. Almost everyone else is concerned too. But, by following the herd, you run the distinct possibility of becoming too worried: The stock market historically has performed better when earnings growth is slower than…Read More

Category: Earnings, Think Tank

Earnings vs. Revenues

Click to enlarge: MarketBeat – Charts of the Day: Beware if Earnings History Repeats As if there weren’t enough warning signs flashing from earnings season, the always thoughtful John Mauldin offers a one-word assessment of the future for corporate profits: Beware. “Currently, profit margins are cyclically high, near historical highs, and already at unsustainable levels,…Read More

Category: Earnings, Think Tank

Revenue Growth: Signalling A Recession?

Category: Earnings, Economy, Video

JPM’s Conference Call: Q2 2012 Earnings Call

Category: Corporate Management, Earnings, Think Tank

7 Factors To Watch in a Slowing Economy

Just a quick comment as I am still out of sorts due to the 8 hour time difference and some Jetlag: The data continues to come in showing the global economy is slowing. The key question is whether this slowdown is to full on recession or merely a sloppy-muddle-through-barely-above-stall-speed economy. With all of the cross…Read More

Category: Earnings, Economy, Valuation

Earnings Season

Click to enlarge: MarketBeat (WSJ Blog) – Earnings Preview: Companies Getting More Pessimistic With another earnings season on the horizon and Europe’s economy struggling mightily, investors are getting that queasy feeling once again. Companies have been slashing forecasts sharply the last few weeks, with Europe’s continued turmoil often being cited as one of the main…Read More

Category: Earnings, Think Tank

Here Comes Earnings Season

Click to enlarge:   Reuters – Analysis: U.S. companies blame Europe for earnings warnings: As an increasing number of American companies warn their earnings will fall short of expectations, many are pointing the finger at Europe as the culprit.  As the second-quarter corporate results season gets underway in the next few weeks, the euro zone…Read More

Category: Earnings, Think Tank