YouSaid · the spoken record

Sam Burns

lines on the record: 90
first: 2022-01-12
most recent: 2022-01-12
sittings or episodes: 1
sources: podcast

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“They're still going to grab at it whenever they can find it, and U.S. rates are still higher than Europe and Japan, most other developed rates. So there'll be demand for US assets on an interest rate basis because the Fed will be ahead of the other country's curve in terms of raising rates. So I think those will all kind of keep the balance of longer-term rates where kind of where they are.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Not right now, no. I think the fact that the Fed seems to be committed to raising rates for a little while means it's going to be hard for yields to go down a lot unless you get to the point where people think the Fed has made a policy mistake and overtightened. We're probably a little ways away from that yet. That would be a 2023-24 problem probably. So for right now, I think yields maybe stay in the general broad range they've been in or bump up a little higher. But I don't think they're going to go skyrocketing. But yeah, I don't think they're going to come down a lot given, I think, risk assets will probably hold up. So there won't be a huge shift out of stocks and into bonds, which would cause rates to come down. I don't think the Fed's going to make bond yields go down itself. So I think it'll be, but I think there's still a lot of demand globally for fixed income. People want safe interest. And so”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Is probably going to be slower, inflation will come back down. Those disinflationary forces that were in place for years and years up until 2020 are going to kind of come back. Demographics and debt and technology, all those things that are long-term trends will reassert themselves eventually. I think those are all going to keep both the Fed and interest rates in general from going up too high over the longer term. So I think rates could back up a little bit further from here, but I don't, I'm not a massive bond bear on long-term rates because I don't think the economy can handle them and I don't think the Fed is going to push things that far. So I would say maybe a little higher than here, but not a lot higher.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, my general longer term view is that the yield probably won't go up that high, meaning that the prospect of a 5% yield on the 10 years or 30 years is pretty remote. I certainly think the yields could back up some from where they are now. But I think the general view in the markets and that I tend to agree with is that the Fed's kind of terminal interest rate, say two years from now is probably going to be 2% or less. It's probably not going to be much above that. So if you don't think that short-term rates in the Fed are ever going to push rates up much above maybe 1.5 to 2%, it's hard to make the argument that 10 or 30-year rates are going to be a lot higher than that. And I also don't think that, you know, once we get past this kind of phase of higher inflation and supply chains and stimulus, when we get, say, you know, in 2023, 2024, the economy.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Reserves in the banking system, which is important, but not the main driver of what Apple's doing or what companies in general are earning or how investors behave overall. I think fiscal policy is much more important now than monetary policy because we're kind of stuck in low rates and there's plenty of reserves in the banking system right now and probably will be for a while. So even if the Fed does stop buying bonds and even reduces its balance sheet for a while, that will get a lot of play and it's a big talking point. I don't think it's really going to matter for the fundamentals that much.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“I think right now one of the big things that you see in the news a lot, and people talk about is the Fed, and particularly the Fed's balance sheet, the QE story, that all the money printing that the Fed has done over the years is the one true driver of why stocks have gone up and why stocks do what they do and assets do what they do. I think the importance, I mean, the importance of the Fed's balance sheet and the QE process recently, now and looking forward is less than what people have assumed historically. And even going back to 2008 when it all really started, I think the importance has been overstated. I think it's an important signaling device. It tells you what the Fed is thinking and what they intend to do, but it does not directly drive the returns on a kind of a mechanical basis, or that's not where the money is really coming from, per se. I think it affects the banking system and the”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“So I think there's still some upside to earnings estimates potentially coming. It's just not going to be huge the way it was last year. I think it'll be a little more differentiated. It's not all companies going up or seeing their estimates rise. I think it's going to be a lot more selective, even within sectors and within industry. So it'll be winners and losers. And that's actually a better environment for a process like mayor which tries to do that, to try to isolate the winners from the losers even within sectors and industries. And it's actually been doing better in the last say six months than it did, say, in the second quarter of 2020 in terms of its ability to”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Of what the mayor and the industry work is meant to do is to keep you on trends that are in fact persistent. And then when things start to weaken and go from very strong to less strong to kind of neutral, that will get you tend to get you out of them rotate away from them before they really start to weaken substantially. So you won't pick maybe the very top and the very bottom, but you should get the most of the move and will avoid the really big obvious kind of disasters when things go from bad to worse.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“So a little bit like those shipping companies we were talking about a minute ago has come way down, it's creating it something like five times earnings again because people assume this is the boom time There's going to be a less boom or a bust time coming at some point you can't assume that home builders are going to make as much money over the long run as they are right now and I think that's that's very much the case now Does that mean you should sell them all right now Not necessarily. If we've still got stronger visions meaning the analysts are still finding reasons to raise their estimates even after having raised them consistently for over a year that means they're still you know they're still untapped you know demand in terms of homes and things that's going on and so they still might you know have a tailwind there so I would say it's probably too you don't want to necessarily get off the train if it's still moving in the right direction that's a lot”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“That's right, yeah. No, any sort of quantitative process is going to have times when you have to kind of override it a little bit or at least be aware of what its limitations might be. There are no silver bullets. And certainly things like earnings divisions where there can be other reasons why analysts do what they do or macrocyclical effects that will override them. And so yeah, so home building is something that's been doing very, very well for a long time. And the earning provisions for Lennar, I'm just looking at the chart at the moment, have been basically in a straight line up for more than 18 months, certainly since, yeah, kind of early 2020 and still are. I mean, estimates are up 8.5% just in the last month for that stock after having been up for a long time. The stock's in well, but not extraordinarily so in recent months.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“And let's go over a few more companies that people may think, oh, the bloom is off the rose, let's say, on a whole home building company like Lennar. We had a huge real estate boom shortly after March 2020. People say, oh, that's mostly over. The easy money's already been made in Lenar. Your model says, no. Lenar is ranked number 10 for mayor in the Russell 3000. Tell us a little bit about why you think that's the case and also you as an analyst are more than your model. There are certain times when you say my model is telling me this. I trust my model. Other times you're saying, my model is saying this, but in my experience, let's discount the model a little bit because something else is going on. So how are you thinking about these really high beta sectors, whether it's homebuilding?”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“That long, then you get back to sort of fundamentals again. So I would say 80 plus percent of the time, you know, things like earnings revisions and fundamentals matter during those kind of panic periods or just after when it's all macro policy and all risk on risk off. And yeah, you have to just pay attention to the macro and not focus as much on the individual company stuff.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, right, right. They have been crediting estimates in 2008. But yeah, then they saw Lehman and all those things happen. And then really cut estimates. And then once the Fed came to the rescue in early 2019, then they did start to raise estimates. But yeah, the market will tend to move faster than the analysts will when you get those major macro turning points. And that's when analyst behavior and fundamentals in general even valuations don't matter as much in those periods. So when you have those really intense kind of risk-on, risk-off periods, that's when relative performance of earning divisions or PE ratios or anything else are just not going to matter as much because it's all investors care about for a little while is risk on risk off. And once that kind of passes, and usually they don't last.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Was selling, you know, everyone was waiting to see what the Fed or the federal government would do, and that's all that mattered. It was just pure risk on risk off and settle decisions about which sector and which stock are going to do relatively well didn't really matter for that time.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, right. And that is very much what we've seen historically is that during periods of major macroeconomic changes, you know, big kind of panic periods or COVID when there's a major kind of global macro event that happens suddenly. And then the policy responses to it, analyst behavior, what they're doing with their estimates is going to just going to be less relevant to investors. Because if it's all risk off and I just want to get out of stocks and I'm panicking and I don't care what their earnings are, I just want to be in cash and be safe, then yeah, it doesn't matter what the analyst says, you know, plus or minus a little bit on the earnings. And during those times, you know, certainly in March, April 2020, most stocks had negative earnings revisions. Almost all the stocks had estimates were being cut. Same thing with September to December of 2008. It looked like the world was ending and everyone was cutting estimates.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and how potent would you say earnings revisions are at this point in the cycle? I imagine there are times when the macro isn't really doing anything pretty sleepy time in markets when earnings fundamentals and revisions are what matters the most. There are other times like in March 2020, then the earnings revisions didn't play as role because there was this huge gyration in the markets. Right now, I mean, like, what do you think the odds are, let's say, that consumer staples continue to have really bad earnings revisions and energy companies continue to have really good earnings revisions, but consumer staples outperforms energy because investors are rushing to risk off.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“As a rule, some can, but overall that's what they're really best at. It's kind of the relative view of which stocks within their space are going to do the best. And that's where the earnings revisions really shine.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“To add value for. Actually, even within a sector, if you ask an energy analyst where oil prices are going to be, he or she may not know any better than you or I would, but he can tell you whether this particular company is going to benefit more from higher oil prices than that company will because of their hedging practices or their whatever they're doing at the company level. So if you want to know which energy stock to buy and which ones will have stronger revisions or weaker revisions, they're actually very good at that. And that's where the Mare tends to really do the best job is on a relative basis among a list of stocks, which ones are likely to outperform the other one rather than kind of the overall macro where earning is going to be a year from now because that's just very hard to forecast because there's so many macro things that can change in terms of policy and Fed and things like that that analysts aren't really paid to forecast and can't do.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Really, sort of paid to forecast the macroeconomy overall. And their only task with forecasting earnings for their small list of maybe 10 or 20 or 30 companies one specific industry typically. So you'll have an analyst that covers just semiconductor stocks and ignores all the other companies. And so that's why it's useful in some ways to look at all of them as an aggregate to see what's going on, even though the analysts themselves are not following all the stocks individually. So yeah, at major turning points in the economy, analysts will typically be kind of late to downgrade and then to upgrade. And so we certainly have to take that into account when you're looking at the pattern of earning revisions in aggregate. So it tends to be much more of a relative decision, meaning which sectors or which stocks at any given point in time have stronger or weaker revisions. That relative view tends to be a much better thing for analysts to be able to”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right. No, I think in aggregate overall, analysts as a group are not going to pick the tops and bottoms in the economic cycle, particularly when they happen more suddenly, like certainly in 2020 was an obvious example of that. Now, earnings estimates going into in early 2020 actually weren't that bullish, meaning estimates have been sort of flat to down going into that because the economy was actually slowing in 2019, if you remember. And the Fed was already cutting rates starting in the middle of 2019 because things had been sort of slowing down going into 2020. So before COVID ever showed up, there was a kind of a weakening pattern. But no, in 2007 and 8, they responded to the news, but they did not anticipate the full economic cycle ahead of time. Analysts, because they're focusing on individual companies, most of them are not.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“And there's always that value trap thing where cyclical companies look the cheapest right before they're going to crash. Like if you look at ExxonMobil, oil energy companies, price to earnings ratio, it looked the cheapest in 2007 because even though the stock had gone up a ton, earnings were just incredible. But obviously it's been a very, very bad investment since then, except for 2009 and 2014. But yeah, viewers are interested. I think there's a, we can put up a list of the shipping stocks that are at the top rated mare by USAM. And then if individual stocks, I think there's a new ETF with the ticker great name B-O-A-T, boat. Sam, I want to ask you analyst ability to identify whether a trend will continue is strong. That is the premise on which your mayor framework is based. What is their ability to identify whether a trend is going?”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Times are not going to last forever, so you're not going to price the stock as though those earnings are going to last multiple years into the future. So it's great to have it for this year or next year, but five years from now, there could be another oversupply price go back down again and you have to assume that earnings are going to be very cyclical and fall at some point in the future. The multiple on this year's earnings is very low, but maybe on the long term future stream of earnings, it might be actually much more moderate, assuming kind of mean reversion in the pricing and the earnings for those stocks. So yeah, they look very cheap right now and they've had very strong earning revisions. Some of them have done very well, but you can't assume that's going to go on forever. And I think that's how the market's pricing them right now.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, right. So, I mean, everyone needed their thing shipped as things recovered last year, and there just weren't enough ships to go around, particularly coming from China to the US, things like that, certain shipping routes, demand for all kinds of both finished goods, getting a washing machine was hard, but also getting iron ore and things was hard. The prices for those things went up so people spent more on shipping them. And so anyone who has a bulk freighter over the last year or so has seen huge demand. We've seen all the Baltic dry index and all those indicators of freight costs have skyrocketed, which if you're on the side paying that, that's bad, which is why some of those industrials and consumer areas have been hurt. But if you're the one that's actually getting that money, then you're making huge profits. But I think most investors realize that those kind of”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, right, and that's, I mean, those kind of companies are kind of the textbook example of an extremely cyclical industry. I mean, some years they make lots of money and some years they lose lots of money because they're very long-term asset heavy things. It's hard to build a new ship very quickly and they tend to get booked a long time in advance.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“A lot of the elective surgeries and things like that, spending on healthcare that would have occurred has not occurred because it's been diverted to COVID and emergency rooms and things like that. So the healthcare sector, the private sector that we track, much of that has actually not had good earnings revisions and had relatively weak fundamentals because a lot of the money has been diverted from where it would normally have been spent towards COVID.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“The cyclical sector, some have been very strong, some have been very weak, certainly things like airlines and travel related areas have been very weak due to COVID, but things like air freight and shipping have been very strong because if everyone wants their packages and there's a lot of the supply chain issues that have made up the price of being able to ship things. So you've seen some divergences within certain sectors where they sort of split and then other sectors have been fairly strong overall. But you definitely do see some of those more cyclical areas holding up relatively well relative to the kind of traditionally defensive areas. They can't keep up. And some of them like consumer staples have had supply chain issues or cost input pressures from energy and things like that, packaging costs. Those hurt some of the consumer staples areas, things like that. And healthcare, of course, if you make a new vaccine, that's great.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, so for a while now, the traditionally defensive areas like consumer staples, utilities, and in some degree healthcare have been kind of at the bottom of the relative revisions ranking, meaning that the analysts have not been raising the estimates in those sectors to the same degree that they are in the more cyclical or some of the large-cap growth sectors. So technology has had good revisions, energy recently has had very good revisions. And of course, a lot of that is driven by oil prices, financials have had strong revisions because mortgage activity has been very strong, and the markets have been very strong. So they've all had capital markets benefits from that. They've had growing credit demand recently. So there's been some tailwinds for that sector. Some of the consumer areas have done well. A lot of retail spending has been going on, particularly after all the stimulus we've had, but not all of them. And then things like industrial, some of those kind of traditional”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Or does it wind up being 12 if it winds, if it continues to rise some and winds up being 12, then you could still have a really good market year, even if multiples don't expand anymore.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“You know, double digit, not that sort of 20 30 increases that we saw in 2021. So I think the S&P right now is forecast, or analysts as a group are forecasting about 9% earnings growth for the index for 2022 right now. And so if you think multiples will stay the same, that would imply that the market will be up around 9%. If you think multiples will contract, then you'd get something less than 9% for the calendar year. If you think multiples could expand, then you might get more. So for around 20 times 21, 21 times earnings now, you can then make your projection about where you think the PE ratio for the market will be at the end of next year. The question, you know, from my standpoint is if they're projecting 9% growth now, does that number go up from here or does it fade? Is it wind up being 6%?”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, yeah. Now 2021 was definitely a year when earnings grew somewhat faster than the stock prices did, as well as stocks did, earnings actually did even better. And of course, that's partly recovery from the depressed levels of 2020. But estimates basically were rising all year, which is unusual. Normally, estimates come out. Analysts start the year with very optimistic kind of bullish estimates for the following year. And then as reality kind of sets in, they trim them down to more realistic levels. In 2021, actually we're too conservative and kept having to raise numbers all through the year, which is very much not the typical pattern for a typical year. It is more typical in the very early stage coming out of a recession. It was just even more so this or last year. 2022 is looking more like probably a more typical year when earning growth will be positive but not”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and this is a really important point, which is that earnings in 2021 were phenomenal. They were phenomenally like every people who say, Oh, the stock market's in a bubble, it's all manipulated, they may be right. But setting that aside, the simple fact is that there was very strong, robust earnings growth, so much so that for the S&P 500, which began 2021 in the beginning with the three digit, now it's at 4,700 or something, it made about, I think, $205 for that. So PE multiples actually contracted over 2021. They did not expand because earnings themselves grew. Can you tell us about what analysts are forecasting for 2022 earnings, not specific stocks as we've gone into, but specifically the S&P 500? I've heard that analysts are forecasting earnings to grow at a pretty rapid click, but clip, not click, but they expect earning multiples to contract.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, yeah, the historical average yeah is probably 65 to 70 percent kind of as this typical beat rate on a quarterly earnings reporting cycle because yeah analysts kind of want to make sure that the companies can beat but yeah the last five or six quarters has been around 80 which is much higher than average and is much more than just kind of that kind of gamesmanship would explain so i think analysts really were surprised by the strength in earnings and to some degree i think in companies themselves almost were were surprised by how things have turned out relative to what they might have expected given what was going on with covet and everything else and again that's kind of the historic nature of the stimulus that occurred and the vaccine development all these things that have happened uh faster than everybody expected to them to”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so there's a gamesmanship analysts want to have a good relationship with the CEO, the investors. So they have a systematic pattern of lowballing by saying, actually, they think it's going 160, but they actually say it's 150. So when 160 comes out, it's a beat. So the stock goes up because it's a big of expectations. You're saying, and correct me my data because I know what you're talking about, but I forget the exact percentage, but something like the historical beat rate is 70% because of that gainsmanship. But in 2021, it was something like 80, 85%, right? Somewhere around there.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Think you'll start to see more activity coming up and then starting in a couple in a week or two, and that will drive more of the MERA activity. But going into earnings, estimates are still generally rising. There's still net positive overall, I would say. And so I think you're probably going to see generally good results for Q4 in 2021 overall. And it's been probably six quarters now in a row. We've had really strong beat rates, meaning the actual report earnings come in well ahead of what the analysts were expecting for that quarter, much more so even than normal. And so because they've been more, you know.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Where it normally trades and the revisions aren't as strong as they used to be, or some other companies, so that kind of puts it in the middle. It's not the best, but it's also not negative. So that's why it kind of ranks in the middle now.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Really big blue bars, I mean big month on month changes in the consensus estimates for much of last year, certainly the first half. And now the blue bars have gotten smaller, meaning that the changes, the earnings upgrades are just of smaller magnitude. They're half a percent, maybe 1%, as opposed to 2%, 3%, 4%, 5% last year on a month-to-month basis. So it's still positive, but less so than before and less so than some of the other companies in the market right now. The price momentum is still pretty good. It had a pause for a little while and now it's taken off again. But you look at the multiple. It's at 1.3, 1.4 times the market multiple, which is higher than Apple normally trades. Over the last five years, it's been much more kind of around the market multiple or a little higher. So the 28 to 30 times earnings it's trading at is a pretty good premium for Apple. It normally doesn't trade that high. So it's kind of expensive relatively.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, so yeah, so Apple does still have net positive revisions, so the red line is still rising, but as you can kind of see from the red line there, the slope has kind of come down some. So it was rising steeply up until a few months ago, and now it's rising at a much more moderate pace. And so you can see that the number that revisions breadth figure is 16%. So there is a majority of analysts that are raising estimates, but it's kind of a slimmer majority now than it was during most of 2021. So that means that it's not as decisive a rigid trend as it used to be, or that some of the other companies in the market right now are seeing. So if Pfizer had 70 or 80% of their analysts raising estimates, you know, Apple is a much lower figure, still positive, but 16% is definitely not as strong as some of the other stocks that we've seen. You can see right now. And the same thing for those blue bars. You can see there.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Certainly, it's made headlines for some of its missteps and the fact that people are just coming back from COVID and not buying stay-at-home stuff quite as much, it's really been kind of a poster child for that reversal. But it's maybe had some company specific missteps as well. But it's got all the things that Pfizer doesn't in the sense of having no earnings, but also having increasingly large losses forecasted and very weak price momentum. So it tells you that analysts are not through cutting estimates yet. There's been no change in the fundamentals that would tell you that even after this big decline, it's time to pile in and buy because the stock is cheap or everyone's all done cutting their estimates. There's no sign of that yet.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Can't really have a price earnings multiple for it, but the price momentum has certainly been extremely negative, as you mentioned. That actually started really almost a year ago. And so if you can see in the chart, the red line had been quite positive up until early 2021 when everyone was buying the bikes and staying at home. And kind of early 2021, it's about the time the stock price peaked, but also about the time the earnings revisions peaked. So Analysts started to become much less bullish on the earnings prospects for Peloton about a year ago. And so they started to get negative and then got progressively more negative. And really the last maybe six or seven months, it's been severely negative in terms of most of the analysts have been cutting estimates and they've been cutting by large amounts and the stock has been underperforming. So there's been some company specific things going on. I'm not an expert in Peloton itself.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, so in some ways, yeah, this is sort of the opposite of what we saw in Pfizer, where if Pfizer had strong earnings revisions, strong price momentum, and very cheap valuations, Peloton is the opposite of the 30 analysts that cover Peloton, more than about two-thirds of them net are still cutting their estimate, earnings estimates, and they're cutting them by significant amounts. Now, as you kind of alluded to, Peloton is a money-losing company, so its earnings estimates are negative. So they're forecast to have losses both this year and next year. But the size of those losses has actually been increasing in terms of our analyst forecast. They're expected to lose more money now than they were a few months ago. So that means that valuation for a company that's losing money is kind of not much to say about it. The earnings or negative, so it's hard to.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“So right now Pfizer is trading at what analysts forecast Pfizer will earn in 2022, which is $6.13. It's like nine times that. So that is a pretty good deal. For something that's, you know, typically it's riskier stocks like copper miners or real estate financial stuff that trades at low multiples like that. So this is why Pfizer is number one in your mayor ranking in terms of in the Russell 3000. Okay, so a little confusing for people who are seeing this the first time, but stick with us. Now let's look at one of the worst rank stocks, which I think is interesting to a lot of people, is Peloton. Peloton ranks as one of the worst stocks in the Thrustle 3000 in terms of mare monitor of analyst earnings revisions. And it has done extremely poorly.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Strong earnings momentum. It's got strong price momentum. And in the bottom section there is the valuation, the relative valuation of Pfizer versus the US large cap S&P 500 universe. So you can see that the purple line there has been going down, which means the stock is being getting cheaper relative to the market. And so whereas at the beginning of 2019, for instance, Pfizer had a multiple, a forward PE multiple.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Much they've raised. So, those are the two main components of Mera. How many unless you're raising estimates and how much they've raised them? The magnitude, the breadth and the magnitude. And that's really the key driver there is that the fundamentals are clearly getting better in terms of the underlying earning story for Pfizer. Now the black line has gone up. That means that the stock has responded. It's outperforming the market. And so that green line in the middle is a rolling six month price momentum indicator. Now it adjusts for the stock's beta size and style to try to kind of remove the effects of the macro market trends. But the important thing is that it's above zero and well above zero. So that tells you that the stock is as outperforming on a risk-adjusted basis by a wide margin. So that's also strong. Price momentum tends to persist in the intermediate term as kind of a well-established quantitative result. So it's got...”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“That's literally off the scale. Yeah, and particularly for a big company like Pfizer, that's very unusual to see a single calendar month where analysts have changed their estimate that much as a group, a 20% move in a calendar, your estimate is big. And so that little bracket 98 there in the very top right corner, that tells you that that movement, the 22% movement in the earnings in a month, is 98th percentile for Pfizer over the last five years, meaning that's one of the biggest month-on-month moves that Pfizer has seen in many years. And actually probably last month or the month prior might have been the only higher time. You can see those last three bars are all chopped off at the top. They're all as bad as big as they can get. So it's basically told you the analysts have dramatically raised their estimates for Pfizer over the last few months, both in terms of how many analysts have raised and how”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Percentage of analysts that are raising is the more the bigger the agreement among analysts is in terms of positive versus negative. So what you want to see if you're bullish is the red line going up steeply and then the black line typically will kind of follow along in terms of relative performance. Now the blue bars are the percentage change each month and how much the analysts have raised their estimates. So if you look at the numbers there at the top of the chart they have raised their estimate for 2023 or 2022 I should say this year 22% in the last 30 days. That's a really big increase to $6.13 a share.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“See on the chart in the top left corner there, it says there are 21 analysts currently that follow Pfizer that submit estimates, earnings estimates for Pfizer to fax it, which is where I get the underlying source data. So of those 21 estimates, some estimates, some analysts will have raised their estimate for earnings over the last two, three months. Some will have lowered. But if you take the number that raised and you subtract the number that lowered, you get 78%, which is shown next to it there where it says REVR. That's revision's breadth. And that means that net 78% of the 21 estimates analysts have raised their estimate over the last three months. And so that red dotted line is basically just a cumulative sum of those monthly revisions breadth figures. So if the red line is going up, that means there's more analysts raising than lowering, which is a good sign. And the steeper the line is, the bigger the”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, right. Yeah. The idea with the mayor charts is to try to pack a lot of useful information into one chart. So once you get used to looking at them, it's very handy. But the first time you look at it, it's a lot to take in. And so, yeah, so don't try to, I would say, don't worry too much about the details. But the key thing here is that we're showing a five-year chart. The black line is the easiest to explain because it's just a relative performance of Pfizer versus the S&P 500. So if the black line is rising, that means Pfizer is outperforming the market. So you can see recently the most recent movement in the black line was Pfizer has outperformed. Now the red line is the other kind of key indicator for MARE. That is the earnings estimate revisions trend and what we call revisions breadth and all that is is the proportion of analysts that are raising estimates net of those lowering it.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“And what does Mare tell you now? First off of the stocks in the Russell three thousand, the stock that has the number one rating is very interesting. You told me yesterday I never would have guessed it. It is Pfizer. Let's use that as an example here. Now we're looking at the monitor of analyst earnings revisions for Pfizer PFE. Looking at the top chart, what are the blue bars? What are the red dotted line? And what is the black line? And I should say to viewers, this is quite complicated. It took me like 20 tries to really understand what's what”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, right. So, yeah, you definitely have to take into account kind of where these analysts, you know, how they behave, what they're doing, what their incentives are, when you kind of analyze the sort of data. And you're right. I mean, analysts do have incentives to be close to say what the company guidance might be or what their own internal brokerage firm is telling them, investment banking has a lot of overlaps with.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Prejudice. I don't know whether it's true. I have this sense that analysts sort of hug the index. So if it's you at another bank, you forecast 160. I'm like, I'm forecasting 161 and it may be 159. Sort of, how do you think that these human analysts who are forecasting and making their own mistakes, how is it that it results in greater returns?”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT