Operating at the Intersection of Technology and the Capital Markets
Tag: earnings estimates
Get ready for an uptick in share repurchase plan announcements. This earnings season as Technology companies issue weak guidance you can be sure that many of those companies will announce new share repurchase agreements to support stock prices. Share repurchase agreements are a waste of capital in my view. CEOs should invest in their businesses … Continue reading Weak Earnings & Buybacks
The S&P 500 is approximately at its long-term average P/E multiple of 20x (if one looks back to 1964). However, that multiple could go lower should the Fed hold rates higher for a longer period than what many investors expect. Further, markets tend not to bottom until after the Fed begins to cut rates (we … Continue reading How Low Will Valuations Go?
Get ready to hear the word "cautious" repeated ad nauseam on forthcoming Technology company EPS calls this month and next. Temenos (tkr: TEMN), is one such example. You may read the FinTech company's Q4 press release here: https://www.temenos.com/news/2023/01/16/temenos-pre-announces-preliminary-q4-and-fy-2022-results-bxf9181m/ Temenos also announced a CEO change. I expect to see more CEO changes than normal in 2023. … Continue reading Q4’22 EPS Call Buzzword: “Cautious”
Back to the office, equities will sell off. We expect that equities will trade off when investors return to the office in January in anticipation of soft earnings. Technology stocks will be hit the hardest. Another leg down on EPS reports. When earnings are reported in January and early February, there will be another leg … Continue reading Equities Over The Next 2-3 Months
The 2008 downturn and the current downcycle have similarities as far as investor sentiment is concerned. We believe that investor sentiment will sour early next year as Q4 2022 earnings reports come in. 2023 earnings estimates and stock prices will move lower off of the Q4 EPS reports. Early cycle disbelief. I recall that in … Continue reading Not So Fast. This Won’t Be Quick & Painless.
This spring when I said the NASDAQ would bottom around 9,000 my thinking was as follows: 2022 would be a year where higher interest rates reset equity valuations lower, especially as it relates to the NASDAQ Composite. 2023 would be a year where poor company fundamentals reset equity valuations lower. The NASDAQ has experienced some … Continue reading Markets Have Another Leg Down
It is best for companies to be conservative with their Q4 and 2023 outlook on EPS calls. We are 1/6 through Q4 and Technology companies have to be seeing weaker demand today versus 3 and 6 months ago. Enterprise Technology companies are likely seeing deals of all sizes get pushed back in the pipeline - … Continue reading It Is Best For Companies To Be Conservative On Q3 EPS Calls
P/E multiples will be in flux for the next few months. Phase I will begin in October. Phase II will begin in January. The sequence will look something like the following: Analysts: Many sell-side analysts will revise their December quarter Revenue and Earnings estimates downward coming off of the September quarter earnings calls beginning in … Continue reading P/E Multiples In Flux
Higher U.S. interest rates will continue to ensure that capital will flow disproportionately into U.S. Dollars at the expense of other countries and currencies. For companies that sell into the U.K., Germany, western Europe in general as well as Japan, this means that Reported Revenue will be haircut in future quarters as local currency is … Continue reading FX Headwinds Will Persist Into 2023
This "bad news is good news" trade that has persisted over the past 2-3 weeks is nonsense. Ask yourself: "what is coming next"? Earnings: On the earnings front, 2022 and 2023 Revenue and EPS estimates are coming down later this month. Within the Technology sector, investors will see the impact of this with soft Ad … Continue reading Bad News Is Good News Is Nonsense
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