Aligning Sales Growth Expectations With History [Interactive] by Eric Bush, CFA – Gavekal Capital Blog
Analysts are significantly ratcheting downs sales growth expectations for US companies compared to the actual growth rate companies have delivered over the previous five years. In the interactive table below, we show actual sales per share growth, annualized, over the past five years for each US industry group in dark blue. In light blue, we show what the average annual sales growth expectations for the next four years are based on Factset estimates. Use the drop down menu in the top right hand corner to investigate industry groups in other sectors.
In general, analysts are expecting much slower growth over the next four years than what we have seen over the past five years. For example, sales per share has grown at a very healthy clip of 14.16% annually in the Automobile and Components industry group. However, analysts are expecting only 6.82% growth annually for the next four years. There is another large disconnect between historical growth rates and future expectations for Food Beverage and Tobacco companies. Sales per share has grown by nearly 7% over the past five years but analysts expect just 2.69% growth annually for the next four years. Lastly, expectations in the industrial sector overall have fallen well below previous growth rates across the board as well.
There are a few industry groups, however, that are expected to have much faster growing sales than they experienced recently. In the financials sector, banks (-1.44%) and real estate (-0.55%) industry groups have both had negative sales growth over the last five years. Analysts are expecting sales growth to improve immensely has banks are expected to grow sales by 7.4% annually and real estate companies are expected to grow sales by 6.87% annually over the next five years. The pharmaceuticals, biotechnology and life sciences industry group has had the fastest growing sales per share growth of any industry group. Analysts only expect this growth rate to increase as this industry group has sales per share growth expectations of over 19% annually for the next four years.