Earnings season kicks off next week and will provide further insight to myriad questions – will companies continue to report beats and surprises to the upside? Can companies continue to maintain record-high margins? Will forward earnings estimates start to reflect the economic reality of higher interest rates and a potential recession? 22Q3 earnings are forecasted at €131.3 billion (+29.4% y/y, -10.3% q/q) while revenue is forecasted at €1,431.4 billion (+18.2% y/y, -1.0% q/q).  Furthermore, analysts have upgraded both earnings and revenue growth expectations heading into earnings season. Earnings growth has increased by 5.2 percentage points (ppt) heading into earnings season.

The British economy has been rattled by a cost-of-living crisis fuelled by higher energy prices which has resulted in the Bank of England (BoE) raising its policy rate by 200 basis points to 2.5% since the beginning of the year with further rises to follow.  Currently, this ranks as the eighth largest annual increase in the base rate going back to 1900 (Source: Refinitiv Datastream). Using the Interest Rate Probability App in Refinitiv Workspace, markets are pricing rates to rise to 4.5% by the end of the year which would result in an increase of 400 basis points in 2022. 

Okay, to be fair, while we enjoy an occasional pun, Rio Tinto is not in a hole – it remains nicely profitable, with positive free cash flows, high dividend yield, and a strong balance sheet. However, against a backdrop of weakening demand and lower commodity prices, analysts have been cutting their estimates on the company. The StarMine Analyst Revisions Model (ARM) from Refinitiv provides a rapid signal to users of significant changes in analyst sentiment, as represented by estimate revisions and/or recommendation changes. Australian-listed mining company, Rio Tinto (RIO.AX) is highly exposed to iron ore prices. As you can see

The consumer technology industry is facing headwinds. Consumer demand appears to be weakening alongside an economic slowdown. Channel inventories are on the rise. Covid-19 related lockdowns are creating supply chain problems within and from China. Higher semiconductor and component prices are increasing margin pressures and a stronger U.S. dollar isn’t helping. In this update, we’ll demonstrate how these developments have changed the sell-side outlook for two companies: Tokyo Stock Exchange listed Sharp Corp (6753.T) and Hong Kong listed Lenovo Group Ltd (0992.HK) and how the StarMine Analyst Revisions Model (ARM) from Refinitiv provided a rapid signal to users of significant

On September 15th, FedEx Corp (FDX.N) delivered a shockwave announcement highlighting an accelerated slowdown in global demand which resulted in the company withdrawing its 22Q2 quarterly guidance. This Product Insight looks back at how the StarMine Analyst Revision Model (ARM) provided a rapid signal to users, informing them of a significant change in analyst sentiment. ARM is a stock ranking model that is designed to predict future changes in analyst sentiment by looking at changes in estimates across EPS, EBITDA, Revenue, and Recommendations over multiple time periods. Exhibit 1 highlights an ARM score of 35 for FedEx Corp (FDX.N) on

What commodity volatilities mean for consumers Ninety-two percent of companies in our Retail/Restaurant Index have reported Q4 2021 EPS. Of the 186 companies in the index that have reported earnings to date, 74% have reported earnings above analyst expectations, 3% matched and 24% reported earnings below analyst expectations. The Q4 2021 blended earnings growth estimate is 48.4%. The Q4 2021 blended revenue growth estimate is 13.5%. Seventy percent have reported revenue above analyst expectations, and 30% reported revenue below analyst expectations. Exhibit 1: Refinitiv Earnings Dashboard Source: I/B/E/S data from Refinitiv  Rising commodity prices Since the pandemic, The Refinitiv /

Due to inflation, several retailers are already dealing with higher cost of goods and services (COGS) – and dealing with the supply chain crisis. They just finished reporting Q3 earnings; 141 retailers have already discussed inflation worries, and 192 have mentioned the supply issues during their earnings calls. Consumers’ short-term inflation expectations rose again, with the median cost of living increase for next year pushing up from 5.7% to 6.0%. This increase is twice the pace of expectations for income growth, which slid to 2.8% from 3.0%, according to the New York Federal Reserve. As a result, the latest Ipsos

We take a closer look at a less-covered area – small-cap stocks.  Looking at the data in more detail, an argument can be made that the small-cap arena (particularly in the U.S.) is providing a compelling investment case.  Recent price momentum, analyst revisions, and earnings growth indicates a positive outlook for small-cap stocks. Small-cap stocks have seen a synchronized rise since November 2020 when news of a potential vaccine made headlines.  Smaller companies tend to be domestically oriented with high degrees of leverage and exposure to the local economy.  With a continual gradual re-opening, small-cap stocks have been outperforming large-cap

Merida Industry Co. Ltd. (9914.TW) is the second largest Taiwanese company in the leisure products industry that focuses on the manufacturing and production of bicycles and e-bikes. COVID-19 resulted in a structural change in transportation habits last year, as individuals avoided public transport and focused on health and wellness. Growing demand for bicycle and e-bike transportation in key markets including China, Europe and U.S. is creating a positive outlook for this bicycle manufacturer. Merida Industry is featured in our Asia FY 2020 Earnings Predictions, where we forecast companies that are likely to beat or miss earnings expectations using Refinitiv StarMine

News of a potential vaccine last week provided a glimpse of hope that the world can return to some level of normalcy in 2021.  The announcement from Pfizer on November 9th sent the Russell 1000 to a new all-time high of 2,000.69 on November 13th. Markets saw an aggressive rotation into value stocks.  The Russell 1000 Value index saw a 5.6% gain last week, in comparison to a -1.3% loss for the Russell 1000 Growth index.  This resulted in the value index outperforming the growth index by 6.9 percentage points for the week ending November 13th. Using Refinitiv Datastream, we

Investors eagerly await the unofficial kickoff to 2020’s third quarter earnings season during the week of October 12. This comes at a time of heightened volatility where the S&P 500 index (.SPX) climbed 15.73% between the June 30 close and September 2 all-time high of 3,588.11 before falling 10.55% to the September 24 low of 3,209.45. With the U.S. presidential election looming and an index that has rebounded 8.34% to 3,477.13 as of the October 9 close, the stakes are high heading into the 2020 Q3 earnings season. Adding to the pressure is a high bar set by multiple new

In last week’s post titled “Benefiting from the SmartEstimate during times of uncertainty”, we highlighted Zalando (ZALG.DE) as a company that had a strong positive StarMine Predicted Surprise for both FY2020 and upcoming 20Q2 earnings release. Zalando reported 20Q2 earnings on August 11 and beat earnings expectations, posting an actual result of €0.47 vs consensus of €0.45, resulting in a 5.62% surprise factor. As a reminder, the SmartEstimate can be seen as a leading indicator that is predictive of future analyst revisions. For customers who wish to look for companies with positive analyst sentiment, we can use the Eikon screener