When we wrote the weekend earnings update and linkfest, Industrials were one of the more oversold sectors, and we promised an update on the group to readers.<\/p>\n
Industrial’s are roughly 10% of the SP 500 by market-cap weight.<\/p>\n
Here is\u00a0both a history of the last 8 quarters of Industrial earnings growth, as well as the estimated earnings growth for the next\u00a05 quarters:<\/p>\n
Estimated (as of 8\/8\/14):<\/strong><\/em><\/p>\n q2 ’15: +10% (the 10% is down slightly from the July ’14 +11.5)<\/p>\n q1 ’15: +13% (the current growth estimate up from the 12.3% on July 1)<\/p>\n q4 ’14: +12% (the 12% estimate for q4 ’14 has been constant all year, since Jan 1 ’14)<\/p>\n q3 ’14: +9% (the q3 ’14 estimate also has been flat all year, in the 9% range)<\/p>\n q2 ’14: +11.1% (highest growth rate since Oct 1 ’13, which was 9.7%, upside surprise for q2 ’14 with most Industrials having reported)<\/p>\n Actual (as of q2 ’14):<\/strong><\/em><\/p>\n q1 ’14: +3.9%<\/p>\n q4 ’13: +14.2%<\/p>\n q3 ‘3: +8%<\/p>\n q2 ’13: +1.4%<\/p>\n q1 ’13: +3.1%<\/p>\n Q4 ’12: -4.5%<\/p>\n Q3 ’12: +5.3%<\/p>\n Q2 ’12: +14.8%<\/p>\n Avg: +5.77%<\/p>\n The fact that GE is labeled an Industrial has always fascinated me, with the majority of its assets being financial-related, so I often wonder given GE’s$260 bl market cap, how the earnings impact the sector reports. (Need to find that out).<\/p>\n As the numbers fall out currently, although they are always subject to revision, the expected growth is looking above average for the next 5 quarters, versus the historical 8 quarters.<\/p>\n For client portfolio’s\u00a0currently, we have a neutral weight in Industrials, but the stocks have pulled back nicely the last three months, despite the healthy quarterly earnings growth.<\/p>\n In my opinion, the drop in crude oil is a positive for the sector, any prolonged strength in the dollar would be a negative.<\/p>\n The revenue growth for Industrials is +2%, towards the lower end of the distribution range for the SP 500’s 10 sectors.<\/p>\n We’ve been adding some Industrial names this week, and am not finished yet, so I cant be more specific for readers. Clients always come first.<\/p>\n Remember, Transport’s were rolled into the Industrial sector about 10 years ago. Trannie’s are a big oil decline beneficiary. (Frankly, I think SP 500 could add Basic Materials, and the Auto OEM’s to Industrial’s, although I understand why the auto co’s are Consumer Discretionary. )<\/p>\n We’ll have more over the weekend.<\/p>\n The bottom-line or short conclusion is that I think Industrials are a global-growth play, and that there is value in the Industrial sector today. Basic materials, too.<\/p>\n Thanks for reading and stopping by. Hope this helped your investing a little bit.<\/p>\n Trinity Asset Management, Inc. by:<\/p>\n Brian Gilmartin, CFA<\/p>\n Portfolio manager<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" When we wrote the weekend earnings update and linkfest, Industrials were one of the more oversold sectors, and we promised…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[17,16,97,56,21,15,79,10,31,120,30,9,78],"tags":[],"class_list":["post-4003","post","type-post","status-publish","format-standard","hentry","category-aa","category-ba","category-basic-materials","category-cat","category-de","category-f","category-fcx","category-fdx","category-ge","category-industrials","category-mmm","category-sp-500","category-x"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/4003","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4003"}],"version-history":[{"count":4,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/4003\/revisions"}],"predecessor-version":[{"id":4007,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/4003\/revisions\/4007"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4003"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4003"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4003"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}