- 59% of surveyed investors expect sequential earnings improvement driven by economic growth in U.S. and Europe, supported by the low interest rate environment
Majority expect sustained or improved organic revenue growth this quarter and nearly 60% predict EPS expansion; outlook for margin acceleration is tempered primarily due to higher input costs
50% believe results will be in line with consensus estimates while 39% are predicting earnings beats
Majority predict the U.S. Fed will continue to raise rates in 2017 and 92% believe this policy will continue in 2018
- Management tone remains positive despite a slip from last quarter’s three-year high; more than 70% describe executives as bullish or neutral to bullish
- 44% of investors now classify equities as overvalued, down from 47% last quarter and 67% in March; notably, nearly half predict valuations will continue to expand through year-end
Investors are most bullish on Financials followed by Technology, while Consumer Discretionary sees largest uptick in positive sentiment; Utilities and REITs remain out of favor
Early indications suggest 2018 is expected to be another strong year though concerns around geopolitical volatility and D.C. dysfunction linger; North Korea worries heighten
72% expect Hurricanes Harvey and Irma to negatively impact 4Q17 U.S. GDP while 62% expect them to have a positive impact on 2018; just over half predict 2017 U.S. GDP will expand year-over-year to 2.5%
HARTFORD, Conn. – October 12, 2017 – Corbin Advisors, a specialized investor relations (IR) advisory firm, today released its quarterly Inside The Buy-side® Earnings Primer report, which captures trends in institutional investor sentiment. The survey is based on responses from 70 institutional investors and sell-side analysts globally, representing over $1.9 trillion in assets under management.
Expectations remain strong heading into 3Q17 earnings season driven by an improved economic outlook, supported by the low interest rate environment. Positive momentum is expected to continue as the majority believe organic growth, cash flow and EPS will improve in 2018, though not surprisingly, margin expansion forecasts are muted given rising input costs.
“I expect earnings to come in better than consensus; the global economy continues to surprise to the upside. Valuation is the big conundrum. In a world of low single-digit 10-year yields, what is the right multiple for the market?” commented Fla Lewis, Chief Investment Officer at Weybosset Research & Management.
Despite record highs, fewer investors now classify U.S. equity markets as overvalued and 46% expect valuations to continue to expand for the remainder of 2017. Buoyed by optimism around growth prospects, 34% describe themselves as net buyers, up from 25% last quarter.
“Coming off a strong second quarter, appetite for equities has not diminished as investors continue to anticipate real global economic growth and seek returns. While management tone ticked lower, the slip likely has more to do with expectations management amid rising sell-side consensus targets and near-term impact of natural disasters rather than lack of growth,” commented Rebecca Corbin, Founder and CEO of Corbin Advisors. “Channel checks reveal expectations for continued strength in resi and non-resi construction, a global capex pick-up and greater optimism around energy prospects. Meanwhile, the majority believe we are in the mid-to-late stage of the economic cycle, suggesting there is more room to run in the longest U.S. post-war recovery on record. Any accomplishments on the U.S. political policy front are likely to supercharge markets as most contributors anticipate legislative gridlock as opposed to meaningful reform,” added Ms. Corbin.
The Eurozone remains the top region for economic improvement over the next six months while favorable outlooks for India and the U.S. are intact. Sentiment on Brazil is improving somewhat while views toward China remain muted.
Surveyed investors and analysts are most bullish on Financials, which also saw the lowest level of bearish sentiment in two years and both Consumer Discretionary and Consumer Staples saw an uptick in sentiment. Conversely, views on Utilities and REITs remain downbeat as investors seek growthier investment opportunities.
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.
Bronwyn Swanson, 203-283-7997