Displaying items by tag: earnings

Monday, 15 April 2019 13:22

Goldman’s Profits Tumble

(New York)

Goldman Sachs investors took it on the chin this week. Earnings numbers just released look pretty grim, especially as compared to some other banks, like JP Morgan, which had good showings. The bank got hit by a triple whammy of lower trading revenues, weaker private equity profits, and lower fees from investment banking, all of which conspired to bring earnings down by 20% in the first quarter. David Solomon, CEO, is promising the company is undertaking a “front to back” performance review of Goldman’s businesses.


FINSUM: This looks particularly poor because JP Morgan was able to achieve the highest ever quarterly profit of a US bank during the same period.

Published in Eq: Financials
Thursday, 11 April 2019 13:53

A Sign This Bull Market is Dying

(New York)

There have been a lot of bullish indicators lately, and not just in share prices rising. However, there is a big warning sign that investors need to be paying attention to. One of the challenges of assessing corporate earnings is to get a feel for where things are really headed when the whole Wall Street reporting mechanism is stacked to make you think companies are always outperforming. One way to do so is to look at spreads between GAAP earnings and so-called “adjusted earnings”, or the doctored earnings companies love to show to make themselves appear more attractive. The wider the spread, the more companies are reaching to appear as though things look good. This, therefore, makes it a bellwether for how earnings and the economy are really trending. The spread between the two types of earnings stood at $200 bn for year-end 2018, the highest level since 2010.


FINSUM: This is not a perfect proxy, but it is certainly indicative, and the indication right now is not positive.

Published in Eq: Total Market
Monday, 04 March 2019 13:56

How to Spot BS on Earnings Calls

(New York)

One of the big challenges in digesting earnings is trying to parse through what are and what are not material statements made by company executives on earnings calls. Executives at publicly traded companies have become experts at deflecting tough questions and use sophisticated and evasive language to obfuscate the direction of their companies. However, American Century Investments is debuting a new piece of language processing software which can intelligently understand the commentary and identify material versus immaterial statements, or what they call “BS”. The software is highly sophisticated in spotting not just key words, but patterns and relationships between statements. It cites four areas that can help it find BS: omission, “spin”, obfuscation, and blame.


FINSUM: This seems as though it could be a useful tool, especially as it is more sophisticated than just using key words (which people can easily adapt to).

Published in Eq: Large Cap
Wednesday, 27 February 2019 13:40

Why Weak Earnings Will Be Good for Stocks

(New York)

If that headline seems like a head scratcher, it is meant to be. Barron’s ran a curious article today which argues that weak forecasts for earnings might actually be a good catalyst for higher stock prices. That seems to defy logic, but would be a continuation of a trend that has been in place for a few years. When companies broadcast weak earnings to come, it tends to make investors nervous, leading to oversold conditions. As you might expect, oversold markets tend to lead to bull runs.


FINSUM: This is a tenuous relationship, but when that has been apparent for the last few years. Stocks do like to climb a wall of worry, and this would be a good wall.

Published in Eq: Total Market
Tuesday, 05 February 2019 13:14

Amazon’s Price Fall is a Good Opportunity

(Seattle)

Amazon has had two rough patches following its last two earnings releases. The stock fell in October after its third quarter earnings release, and again last week after its fourth quarter numbers. December as a whole was a rough patch too. However, all this presents a good buying opportunity, says one equity research analyst. “Amazon typically experiences some downside follow-through over the day and week after a move lower on earnings, but over the next one and three months, these moves lower have presented very good buying opportunities”, says the analyst, from Bespoke Investment Group.


FINSUM: This is not arguing that Amazon is suddenly some kind of value stock, but if you are thinking of going long anyway, the current environment may represent a good buying opportunity.

Published in Eq: Tech
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