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Looking Ahead: Forward Estimates and Valuation
Earnings: Low Single-Digit Earnings Growth Projected for 2019
For the third quarter, S&P 500 companies are expected to report a decline in earnings of -3.6% and growth in revenues
of 2.9%. Analysts see low single-digit earnings growth in the fourth quarter followed by high single-digit earnings
growth for both Q1 2020 and Q2 2020.
For Q4 2019, analysts are projecting earnings growth of 3.4% and revenue growth of 3.8%.
For CY 2019, analysts are projecting earnings growth of 1.4% and revenue growth of 4.3%.
For Q1 2020, analysts are projecting earnings growth of 8.1% and revenue growth of 5.5%.
For Q2 2020, analysts are projecting earnings growth of 9.2% and revenue growth of 6.4%.
For CY 2020, analysts are projecting earnings growth of 10.7% and revenue growth of 5.6%.
Valuation: Forward P/E Ratio is 16.8, Above the 10-Year Average (14.8)
The forward 12-month P/E ratio is 16.8. This P/E ratio is above the 5-year average of 16.5 and above the 10-year
average of 14.8. However, it is equal to the forward 12-month P/E ratio of 16.8 recorded at the end of the second
quarter (June 30). Since the end of the second quarter (June 30), the price of the index has increased by 1.2%, while
the forward 12-month EPS estimate has increased by 0.6%.
At the sector level, the Consumer Discretionary (21.6) sector has the highest forward 12-month P/E ratio, while the
Financials (11.8) sector has the lowest forward 12-month P/E ratio.
Targets & Ratings: Analysts Project 11% Increase in Price Over Next 12 Months
The bottom-up target price for the S&P 500 is 3306.71, which is 11.1% above the closing price of 2976.00. At the
sector level, the Energy (+24.5%) sector is expected to see the largest price increase, as this sector has the largest
upside difference between the bottom-up target price and the closing price. On the other hand, the Real Estate
(+0.8%) and Utilities (+1.0%) sectors are expected to see the smallest price increases, as these sectors have the
smallest upside differences between the bottom-up target price and the closing price.
Overall, there are 10,279 ratings on stocks in the S&P 500. Of these 10,279 ratings, 52.0% are Buy ratings, 41.7% are
Hold ratings, and 6.3% are Sell ratings. At the sector level, the Energy (66%) sector has the highest percentage of Buy
ratings, while the Consumer Staples (41%) sector has the lowest percentage of Buy ratings.
https://lipperalpha.refinitiv.com/
SP 500 Earnings: FedEx This Week – A Look into a Major Transport
Posted: 14 Sep 2019 02:02 PM PDT
FedEx (FDX) reports their fiscal Q1 ’20 after the closing bell on Tuesday, September 17th. 2019.
The major Transport component gives investors a look into a number of major geographies, not the least of which is Europe and South East Asia China, via FedEx Express and also a look into the US consumer via FedEx Ground.
FedEx has had a number of headwinds the last 18 months, which has brought the stock down from $274 in January ’18 to its close Friday, September 13th,2019 at $174.
When FedEx reported their fiscal Q4 ’19 in June ’19, they guided conservatively (as they usually do) for 2020 given the tariff issues, what’s happened with China growth, European growth, etc. so the stock has been consolidating in this trading range between the low $150’s and $200 (April ’19 high) since the December ’18 low at $150.94. On the June ’19 call, FedEx guided to lower Express and Ground margins and said only Freight would see margin expansion in fiscal 2020.
The important thing is the stock has NOT made a new low with the lower 2020 guidance and conservative estimates around Express and Ground.
(The more in-depth earnings previews done for client positions are posted over at Seeking Alpha, so look for a full earnings preview on FedEx late Sunday night, early Monday morning. The drone attacks on Saudi Arabia crude oil facilities is another fly in the ointment given FedEx’s P/L delta to crude oil prices and fuel costs, so that could be a new and interesting development covered on the conference call Tuesday night.)
Companies that report between now and the end of September, early October, typically have an August 31 quarter-end date, which gives readers an extra two month look into US economic activity, from the June ’19 quarter end with the 2nd quarter earnings reports. This perspective matters.
http://fundamentalis.com/
Earnings: Low Single-Digit Earnings Growth Projected for 2019
For the third quarter, S&P 500 companies are expected to report a decline in earnings of -3.6% and growth in revenues
of 2.9%. Analysts see low single-digit earnings growth in the fourth quarter followed by high single-digit earnings
growth for both Q1 2020 and Q2 2020.
For Q4 2019, analysts are projecting earnings growth of 3.4% and revenue growth of 3.8%.
For CY 2019, analysts are projecting earnings growth of 1.4% and revenue growth of 4.3%.
For Q1 2020, analysts are projecting earnings growth of 8.1% and revenue growth of 5.5%.
For Q2 2020, analysts are projecting earnings growth of 9.2% and revenue growth of 6.4%.
For CY 2020, analysts are projecting earnings growth of 10.7% and revenue growth of 5.6%.
Valuation: Forward P/E Ratio is 16.8, Above the 10-Year Average (14.8)
The forward 12-month P/E ratio is 16.8. This P/E ratio is above the 5-year average of 16.5 and above the 10-year
average of 14.8. However, it is equal to the forward 12-month P/E ratio of 16.8 recorded at the end of the second
quarter (June 30). Since the end of the second quarter (June 30), the price of the index has increased by 1.2%, while
the forward 12-month EPS estimate has increased by 0.6%.
At the sector level, the Consumer Discretionary (21.6) sector has the highest forward 12-month P/E ratio, while the
Financials (11.8) sector has the lowest forward 12-month P/E ratio.
Targets & Ratings: Analysts Project 11% Increase in Price Over Next 12 Months
The bottom-up target price for the S&P 500 is 3306.71, which is 11.1% above the closing price of 2976.00. At the
sector level, the Energy (+24.5%) sector is expected to see the largest price increase, as this sector has the largest
upside difference between the bottom-up target price and the closing price. On the other hand, the Real Estate
(+0.8%) and Utilities (+1.0%) sectors are expected to see the smallest price increases, as these sectors have the
smallest upside differences between the bottom-up target price and the closing price.
Overall, there are 10,279 ratings on stocks in the S&P 500. Of these 10,279 ratings, 52.0% are Buy ratings, 41.7% are
Hold ratings, and 6.3% are Sell ratings. At the sector level, the Energy (66%) sector has the highest percentage of Buy
ratings, while the Consumer Staples (41%) sector has the lowest percentage of Buy ratings.
https://lipperalpha.refinitiv.com/
SP 500 Earnings: FedEx This Week – A Look into a Major Transport
Posted: 14 Sep 2019 02:02 PM PDT
FedEx (FDX) reports their fiscal Q1 ’20 after the closing bell on Tuesday, September 17th. 2019.
The major Transport component gives investors a look into a number of major geographies, not the least of which is Europe and South East Asia China, via FedEx Express and also a look into the US consumer via FedEx Ground.
FedEx has had a number of headwinds the last 18 months, which has brought the stock down from $274 in January ’18 to its close Friday, September 13th,2019 at $174.
When FedEx reported their fiscal Q4 ’19 in June ’19, they guided conservatively (as they usually do) for 2020 given the tariff issues, what’s happened with China growth, European growth, etc. so the stock has been consolidating in this trading range between the low $150’s and $200 (April ’19 high) since the December ’18 low at $150.94. On the June ’19 call, FedEx guided to lower Express and Ground margins and said only Freight would see margin expansion in fiscal 2020.
The important thing is the stock has NOT made a new low with the lower 2020 guidance and conservative estimates around Express and Ground.
(The more in-depth earnings previews done for client positions are posted over at Seeking Alpha, so look for a full earnings preview on FedEx late Sunday night, early Monday morning. The drone attacks on Saudi Arabia crude oil facilities is another fly in the ointment given FedEx’s P/L delta to crude oil prices and fuel costs, so that could be a new and interesting development covered on the conference call Tuesday night.)
Companies that report between now and the end of September, early October, typically have an August 31 quarter-end date, which gives readers an extra two month look into US economic activity, from the June ’19 quarter end with the 2nd quarter earnings reports. This perspective matters.
http://fundamentalis.com/
