Gavekal Capital: Estimates Revisions: Winners and Losers

Monday, January 12, 2015

Estimates Revisions: Winners and Losers

With earnings season on the horizon, we thought we'd take a quick tour of estimates around the globe.  Positive revisions to sales and earnings estimates in developed countries have hovered around 20% to 25%, respectively, over one-, three-, and six-month time periods.

image

Historically, these low levels of positive revisions for companies in the MSCI World Index haven't typically lasted for long periods of time.  Can we expect an increase in optimistic estimates?

image
image

Developed Europe has the dubious distinction of being the leader in negative revisions while the outlook for North American (and, particularly, U.S.) companies is distinctly more positive.

image

image

image

And, while sales and EPS revisions over a three- and six-month time horizon have not been overwhelmingly optimistic in emerging markets either, there was a notable improvement in sales estimates over the last month, led mostly by improvements in Asian companies.

image

image

image

image

Of course, sales and earnings are impacted by exchange rates.  If current trends in major currencies persist and these relationships hold, there is a chance that revisions could deteriorate further.

image
image