Corbin Releases Inside The Buy-side®: 3Q17 Industrial Sentiment Report

October 19, 2017
  • Nearly 90% expect 3Q17 Industrial earnings to meet or beat consensus; 66% predict sequential improvement
  • Majority expect 3Q17 revenue and EPS to improve but primarily expect cash flow and margins to be in line with 2Q17 performance
  • Industrials increasingly viewed as fairly valued; only 35% classify stocks as overvalued, down from 54% last quarter
  • 2018 is expected to be another strong year with 38% forecasting 4% organic growth for Industrials
  • Most expect Hurricanes Harvey & Irma recovery efforts to be positive for 2018 U.S. GDP though nearly 60% anticipate negative implications for 4Q17 results
  • Over 80% expect Defense to grow faster than GDP, the second highest sentiment ever recorded for a sub-sector; Auto continues to garner the largest share of bearish views

Click here for full report

HARTFORD, Conn. – October 19, 2017 – Corbin Advisors, a specialized investor relations (IR) advisory firm, today released its quarterly Industrial Sentiment Survey, which reveals continued high expectations for top- and bottom-line 3Q17 performance driven by industrial orders momentum and general uptick in global growth.  Perceived executive tone remains near all-time high levels. The survey, part of Corbin’s Inside The Buy-side® publication, is based on responses from 30 institutional investors and sell-side analysts globally who actively follow the Industrial sector.

Optimism continues to build heading into 3Q17 earnings season: 87% anticipate earnings to be in line with or better than consensus while 66% forecast sequential improvement, marking the most bullish earnings sentiment since survey inception in June 2015. Investors expect revenue and EPS growth though quarter-over-quarter margin expansion is unlikely amid rising input costs. Further, management tone remains encouraging with 84% of survey respondents characterizing executive language as neutral to bullish or outright bullish. Despite predicted strength, Hurricanes Harvey and Irma are expected to negatively impact 2H17 results as orders in affected areas are pushed out.

Looking ahead, approximately 75% expect EPS and revenue growth to strengthen in 2018 while just 35% now classify Industrials as overvalued, sharply down from 54% last quarter.  Fueling sentiment, 71% expect U.S. GDP to improve over the next six months, nearly double quarter-over-quarter while Hurricane recovery efforts are expected to be a positive contributing factor. 

“Investors are showing increased enthusiasm toward Industrials, as manufacturing and global economic growth continue to gain steam,” said Rebecca Corbin, Founder and CEO of Corbin Advisors. Ms. Corbin added, “Outlooks for the Oil & Gas market, Non-resi Construction and U.S. GDP improved significantly from last quarter and we continue to see better demand across most end markets.  One of our more interesting findings is a sharp uptick in positive sentiment toward Brazil, which saw the highest vote of confidence regionally. Our channel checks indicate we are in a ‘feel good’ place and that measured growth is expected to continue. Passage of the Infrastructure Bill and/or Tax Reform will supercharge equities as a positive outcome is priced in at less than 30%, according to our survey, while looming geopolitical conflict could be a black swan.”

Surveyed financial professionals are most bullish on Defense, which gained significant favor and posted the second highest sentiment ever recorded for any sub-sector. Building Products and Non-resi Construction also saw notable increases. Conversely, Auto continues to garner the most bearish sentiment, while Distribution had the largest uptick in negative views.

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  www.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 www.CorbinAdvisors.com.

Contact

Corbin Advisors
Bronwyn Swanson, 203-283-7997
bronwyn.swanson@corbinadvisors.com