Earnings are also known as profits. At the most basic level, a company’s earnings consist of what’s left over after all costs are taken out from the revenue generated. Earnings are also the basis for corporate taxes. Many corporations report EBITDA, or earnings before interest, taxes, depreciation and amortization. The most important thing to watch for when researching a company is where earnings are forecasted to move. Investors want to see that the future expectations are for the earnings to grow over time.
There’s a tremendous amount of noise surrounding the stock market. And so it’s important to cut through it to focus on what really matters as an equity investor: what corporations are actually saying about their businesses.
Even though the stock market is a secondary pricing mechanism anchored by monetary policy, it is a system that generally tries to discount a future stream of earnings…. Read More
With the Federal Reserve waiting to change the interest rate cycle, the saving grace for the stock market is that the central bank will only do so if the economic and inflationary data is strong enough.
Last year, investor sentiment reacted positively to the potential for changes in monetary policy. If economic growth was improving, an increasing cost of capital is natural…. Read More
Institutional investors are still buying earnings safety and predictability in an otherwise slow-growth environment.
In any market, good businesses stand out both in terms of operational growth at a faster rate than the general economy and good share price performance. The Sherwin-Williams Company (SHW) and Alliance Data Systems Incorporated (ADS)… Read More are two examples of the kinds of companies institutional investors favor.
As corporate earnings tumble in, equity market action has been more tuned to stronger oil prices. A number of companies have now reported, and the numbers aren’t that bad. It’s still in the early stages, of course, but so far, there have been a lot of good financials. Having said that, sales growth has been missing early this corporate earnings season…. Read More
For many of you who have been long-term readers, you know that I’ve been a bull towards China and Chinese stocks. Yes, there was also the period of deception and fraud with Chinese stocks listed on U.S. stock market exchanges a few years back, but much of that has been cleaned up by the Securities and Exchange Commission (SEC).
Short-Term Outlook for China Volatile
Chinese stocks are no longer favored by investors…. Read More