The week of February 6th marked a notable event for the Russell 1000 where the 1-year percent change in the forward 12-month EPS estimate turned negative.  In the last 20 years, this has only occurred on three prior occasions – July 2008, August 2015, and March 2020. Using Refinitiv Datastream, the forward 12-month EPS estimate for the Russell 1000 is currently $236.81 per share compared to $238.18 last year, resulting in a 1-year percent change of -0.6% (Exhibit 1). It is very likely that we continue to see a further decline in this calculation as we progress throughout the year

U.K. equities have generally underperformed its global peers consistently over the last decade.  The FTSE All Share has experienced a compound annualized growth rate (CAGR) of 4.7% and 7.3% over the last 5 and 10 years respectively.  In comparison, the Russell 1000 CAGR over this same period is 16.5% and 14.9%, while the Datastream World Market CAGR is 11.1% and 9.9% respectively. The start of 2022 has been one of the most volatile on record which we highlight in a prior note (Data Insight: A Turbulent Start to the Year for Global Equities, January 27, 2022).  To this point, the

Higher commodity and wage inflation combined with hawkish interest rate expectations may create a challenging environment for U.S. small-cap stocks. In a prior note (Data Insight: A Turbulent Start to the Year for Global Equities, January 27, 2022), we found that the Russell 2000 has suffered the largest drawdowns to begin the year.  As of February 18th, 29% of constituents have experienced a drawdown of at least 50% or more compared to their 52-week high.  Furthermore, only 31% of constituents are currently trading above the 200-day moving average. Smaller companies will have greater challenges managing higher input costs and typically

January has marked one of the most volatile starts on record and the sell-off in high growth technology stocks was vicious. In a prior note (Data Insight: A Turbulent Start to the Year for Global Equities, January 27, 2022), we observed that technology stocks suffered from the largest drawdown in the Russell 1000 index.  94% of constituents within the information technology sector have experienced a drawdown of at least 10%, while two-thirds of the sector have experienced a drawdown of at least 20%. Netflix Inc, while having GICS Sector of Communication Services and a Refinitiv Business Classification Sector of Technology

January has marked one of the most volatile starts to the year given macro, political, and geopolitical uncertainty.  The VIX index reached 31.2 on January 25th, up 81.0% year-to-date and currently at a one-year high. As a result, most global equity indices have had the worst start to the year since 2008 and are approaching a ‘correction’ which is defined as a 10% drop from the most recent high. Using Refinitiv Datastream, Exhibit 1 looks at the year-to-date performance for the Russell 1000 which is currently down 9.1%.  The chart is a point-in-time comparison, meaning for each blue bar in

In October 2021 we published our 21Q3 earnings surprise candidates based on StarMine predictive analytics. Using the Russell 1000 Index as our universe, our 21Q3 earnings surprise predictions scored 90% correct. The StarMine SmartEstimate®  is a weighted average of analyst estimates, with more weight given to more recent estimates and more accurate analysts. Our research has shown that when the SmartEstimate® differs significantly from the consensus (I/B/E/S Mean), the Predicted Surprise accurately predicts the direction of earnings surprises or further revisions 70% of the time. When significant Predicted Surprise for revenue is also present for the period, the accuracy improves to 78%.

The StarMine team has selected five FTSE Russell 1000 companies, using Refinitiv Eikon Workspace, that we expect to beat 21Q3 earnings estimates, based on SmartEstimate® and Predicted Surprise data. Our FTSE Russell 1000 selections for 2021 Q2 positive Predicted Surprises were 80% accurate, which can be viewed here. Our FTSE Russell 1000 picks for positive Predicted Surprises in 21Q3 are — Alcoa Corp (AA.N), Facebook Inc (FB.O), Diamondback Energy Inc (FANG.OQ), Westlake Chemical Corp (WLK.N), and Tyson Foods Inc (TSN.N) SmartEstimates® aim to provide earnings forecasts that are more accurate than I/B/E/S Consensus Estimates, by putting more weight on the recent forecasts of

With the likelihood of the Fed beginning tapering in 2021 and rate hikes seemingly destined to follow in 2022, we decided to examine the performance of the value and growth indices relative to changes in 10-year yields. Using Datastream, we charted the performance of the indices and we saw that growth has materially outperformed value since the beginning of 2019 (Exhibit 1). Exhibit 1: Russell 1000 Growth Index vs. Russell 1000 Value Index Performance Since 1/1/2019 Much of the outperformance of growth vs. value has been explained by the persistently low-rate environment. As the cash flows from growth stocks tend

The COVID-19 pandemic changed many things, including the way business is conducted. One year ago, several businesses asked their U.S. employees not to come into the office and work from home — for two weeks. However, since that announcement, most employees have not returned to the office. The pandemic has certainly influenced stock market winners and losers. Exhibits 1 and 2 show the S&P 500 top and bottom 10 stock price movers. Consumers were avoiding public transportation amid the pandemic, and that trend helped car sales. Health and wellness are also a top priority, so many decided to buy a

Judging from the graph above, you might not be blamed for claiming everything we learned from Fama and French is obsolete and that traditional factors no longer work. For any of you who find that reference obscure, Eugene Fama and Kenneth French, while professors at the University of Chicago in the early 90’s, published research that expanded the Capital Asset Pricing Model (CAPM) beyond the single factor, Beta, adding a size factor and a valuation factor. This is now referred to as the Fama-French three-factor model. The assertion was that, over time, small stocks outperform large-cap stocks and value stocks,

The Russell 1000 is expected to see year-over-year (Y/Y) CapEx spending bottom in 19Q4 at 1.1%. The real estate and industrials sectors are expected to see the largest 19Q4 Y/Y declines, while the consumer discretionary and consumer staples sectors are expected to post the greatest increases. The real estate sector is expected to see 19Q4 Y/Y CapEx decline 36.7%. Analysts anticipate that the industrial REITs (-87.5%) and office REITs (-84.5%) sub-industries will post the largest declines, while the residential REITs (17.3%) sub-industry is expected to have the greatest increase in 19Q4 Y/Y CapEx. The industrials sector is expected to see

Ninety percent of Russell 3000 companies have reported 19Q3 earnings. Of the major U.S. indices shown above, the S&P 500 is the only one that may post positive 19Q3 year-on-year (Y/Y) earnings growth. For this to happen, the remaining S&P 500 companies would need to beat current earnings estimates by 5.7%.