Nyheter
US Earnings highlight a worrying trend
US Earnings highlight a worrying trend The US earnings season looks grim and at current valuations are not justified given such weakness in earnings.
In aggregate we have seen a Q1 2016 versus Q1 2015 decline in net income of 7.2%, not as bad as last earnings season where Q4 2015 fell 8.1%, but it’s the continuation of the trend that is worrying. Aggregate net income has fallen to levels not seen since September 2012 based on the 95% of companies that have reported. Furthermore, it’s not just an earnings issue – revenues have fallen by a similar amount.
(Click to enlarge)
Analysts have heavily downgraded their expectations to earnings by 9% since February, when the estimates are first made. The downward revisions to the outlook represents the most aggressive since the credit crisis and perversely has led to results beating expectations 70% of the time.
It’s not all doom and gloom though, defensive sectors such as consumer staples, healthcare, utilities and telecoms have all had positive net income and revenues.
Perhaps the most astonishing point is that Apples’ net income and revenues comprise 2.1% and 4.5% respectively for the S&P500, stripping it out of the results highlight they are a significant contributor to this earnings season’s quarterly falls. With Apple’s results, net income fell 4.8% versus Q4 2015, without Apple net income fell only 1.8%. The other area of weakness is the energy sector which accounts for more than half of the fall in net income – if the weak energy sector and Apple are removed from the results, the earnings season has shown quarterly net income growth of 1.5%.
(Click to enlarge)
Whilst this is positive news to some extent, the final nail on the coffin for this earnings season has been the rapidly dwindling levels of free cash flow (cash generation after capital expenditures), which is now at the lowest (with our without Apple) since December 2008, just after the collapse of Lehman Brothers.
US equities at current valuations are not justified given such weakness in earnings.
James Butterfill, Head of Research & Investment Strategy at ETF Securities
James Butterfill joined ETF Securities as Head of Research & Investment Strategy in 2015. James is responsible for leading the strategic direction of the global research team, ensuring that clients receive up-to-date, expert insight into global macroeconomic and asset class specific developments.
James has a wealth of experience in strategy, economics and asset allocation gained at HSBC and most recently in his role as Multi- Asset Fund Manager and Global Equity Strategist at Coutts. James holds a Bachelor of Engineering from the University of Exeter and an MSc in Geophysics from Keele University.
FLXS ETF är ett sätt att få exponering mot Saudiarabien
HODL fyller sex år
BT27 ETF köper italienska statsobligationer med förfall 2027
WisdomTree lanserar Physical XRP ETP
ETF från Amundi erbjuder klimatvänlig exponering mot företag från Europa med valutasäkring
Börshandlade fonder med månatlig utdelning
Vilka börshandlade fonder lockade mest i oktober 2024?
Post-election recap: Three takeaways for crypto investors
JEQP ETF spårar Nasdaq-100 och ger en månadsvis utdelning
JEIP ETF spårar amerikanska aktier och ger en månadsvis utdelning
-
Nyheter3 veckor sedanBörshandlade fonder med månatlig utdelning
-
Nyheter3 veckor sedanVilka börshandlade fonder lockade mest i oktober 2024?
-
Nyheter1 vecka sedanPost-election recap: Three takeaways for crypto investors
-
Nyheter2 veckor sedanJEQP ETF spårar Nasdaq-100 och ger en månadsvis utdelning
-
Nyheter2 veckor sedanJEIP ETF spårar amerikanska aktier och ger en månadsvis utdelning
-
Nyheter2 veckor sedanNya ETFer från J.P. Morgan ger tillgång till amerikanska företag i kombination med en överlagringsstrategi
-
Nyheter3 veckor sedanKryptokorgar: Automatisk diversifiering av kryptoinvesteringar
-
Nyheter2 veckor sedanJ.P. Morgan Asset Management utökar sitt Equity Premium Income Active UCITS ETF-sortiment och listar JEPI och JEPQ i Europa
