Q1'23 Inside The Buy-Side® Earnings Primer®

Corbin Advisors Releases Inside The Buy-side®: Q4’19 Earnings Primer

Findings Reveal a Sea Change in Investor Sentiment as Companies Continue to Handily Beat Expectations – Investors Forecasting 2020 Guidance to Be In line or Better Than 2019
  •  54% believe earnings will be In Line with consensus; less than one-quarter predict Below consensus estimates, down from nearly 40% last quarter
  • While most investors expect EPS and Organic Growth to be In Line with Q3 results, all key metrics – EPS, Organic Growth, Margins and FCF – registered increases in Better Than expectations and saw decreases in Worse Than views; notably, investors are expecting strong FCF and margin resiliency
  • 73% expect full-year 2020 guides to be In Line or Better Than 2019
  • Investor sentiment registers at more optimistic levels with those classifying their view as Bullish or Neutral to Bullish increasing to 52% from 37% last quarter
  • Executive tone is described as more upbeat by 43% of investors, up from 31%
  • Shrugging off U.S. political risk, 97% do not believe the impeachment hearings will lead to the removal of President Trump

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HARTFORD, CT – January 17, 2020 – Corbin Advisors, a research and advisory firm specializing in investor relations (IR), today released its quarterly Voice of Investor™ Earnings Primer, which captures trends in institutional investor sentiment. The survey, which marks the 41st issue of Inside The Buy-side®, was conducted from November 21, 2019 to January 7, 2020 and is based on responses from 82 institutional investors and sell side analysts globally, representing more than $1.2 trillion in equity assets under management.

Following three quarters of deteriorating investor expectations, over 30% of investors are now expecting sequential improvement, nearly double quarter-over-quarter. Notably, 41% of investors expect fourth quarter results to be In Line with consensus; this follows the third quarter earnings season that saw ~75% and 60% of S&P 500 companies printing positive EPS and revenue surprises, respectively.

Underscoring the widespread increase in optimism, only 24% believe earnings will come in Below consensus, down from nearly 40% last quarter. While growth is expected to remain tepid, surveyed investors are forecasting big free cash flow numbers and margin resiliency. Notably, nearly three-quarters expect corporate outlooks for 2020 to be In Line or Better Than 2019 results.

Kim Forrest, Founder and CIO at Bokeh Capital Partners commented, “I expect full-year 2020 guidance outlooks to be in line versus 2019 and although we may have a deal, we don\’t understand what it is yet. The devil is in the details.”

Investor sentiment registers at a more optimistic level, with those classifying their sentiment as Bullish or Neutral to Bullish increasing to 52% from 37% quarter-over-quarter.  Also supporting outlooks, 43% describe executive tone as more upbeat.

“We saw a significant shift in optimism across all channel checks this survey, buoyed by a strong consumer, low interest rate environment and strong corporate balance sheets, further supported by actual progress on the U.S.-China trade deal,” said Rebecca Corbin, Founder and CEO of Corbin Advisors. “Expectations management will play a critical role this earnings season as corporates set the stage for 2020. The markets will benefit this year from companies remaining conservative in their annual outlooks, as uncertainty and challenges persist, including tepid economic growth, anemic industrial production, the impact of wide-sweeping corporate cost reductions and the U.S. political election.”

Despite all-time market highs, only 55% of investors classify U.S. markets as Overvalued, in line year-over-year. In that vein, 28% report Decreasing cash holdings while 31% were Net Buyers, the highest level registered since December 2017.

Among sectors, Technology and Healthcare remain top choices for the sixth consecutive quarter. Defensive plays are the only sectors to see spikes in bearish sentiment, specifically Consumer Staples, REITs and Utilities.

Since 2006, Corbin Advisors has tracked investor sentiment on a quarterly basis. Access Inside The Buy-side® and other research on real-time investor sentiment, IR best practices and case studies at CorbinAdvisors.com.

About Corbin Advisors

Corbin Advisors is a specialized investor relations (IR) advisory firm that partners with C-suite and IR executives to drive long-term shareholder value. We bring third-party objectivity as well as deep best practice knowledge and collaborate with our clients to execute sound, effective investor communication and engagement strategies. Our comprehensive services include perception studies, investor targeting and marketing, investor presentations, investor days, specialized research, and retainer and event-driven consulting.

Inside The Buy-side®, our industry-leading research publication, is covered by news affiliates globally and regularly featured on CNBC.

To learn more about us and our impact, visit CorbinAdvisors.com.

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