Earnings Revisions Are Negative For A Majority Of CompaniesJune 16, 2014
60% of stocks in the MSCI World Index have experienced negative EPS revisions for the next fiscal year (FY1). Only two sectors, Financials and Information Technology, have at least half of their companies raising FY1 EPS estimates. While only 1 in 5 Telecom stocks and 1 in 4 Consumer Staples stocks have a had positive revisions over the past six months.
Sales revisions are slightly better. 46% of all stocks have seen their FY1 sales revised upwards and four sectors (Utilities, Health Care, Energy, IT) have at least half of their companies experiencing positive revisions. Consumer Staples again finds itself near the bottom of the barrel. 69% of all Consumer Staple stocks have had their sales revised downward over the past 6 months.
Energy stocks continue to have the highest growth hurdle rates over the next four years. On average, the Energy sector is expected to grow sales by 8.9% per year for the next four years and it is expected to grow EPS by 16.3% per year for the next four years. Put another way, Energy earnings are expected to almost DOUBLE in the next four years.