Growth Estimates Have Been Tracking Higher YTD by Eric Bush, CFA
Next twelve months (NTM) earnings and sales growth estimates in the developed world have been modestly improving throughout the year. In January, average NTM sales growth estimates were 6%. The latest data point pegs NTM sales growth estimates at 8%. Median NTM sales estimates have gone from 4% to 6%. Similarly, average NTM earnings growth estimates have gone from 11% at the beginning of the year to 14% today. The median NTM earnings growth estimates has improved just 1% from 9% to 10%.
Assets in private equity and venture capital strategies have seen significant growth in recent years. In comparison, assets in the hedge fund industry have experienced slowing growth rates. Q2 2021 hedge fund letters, conferences and more Over the six years to the end of 2020, hedge fund assets increased at a compound annual growth rate Read More
The improvement in growth estimates has been pretty widespread but in particular there has been noticeable changes in the estimates for consumer staples, energy and material stocks. Average and median sales growth estimates have doubled for consumer staple stocks. Average NTM EPS growth estimates have improved by 60% while median estimates have increased by about 40%.
Energy stocks have seen a major trend change occur over the course of the year. At the beginning of the year, EPS estimates were expected to decline marginally. The latest data points has average NTM EPS estimates growing by 19% and median estimates growing by 8%. Sales over the next twelve months are now expected to be around 10%, up from around 5% at the beginning of the year.
Lastly, sales growth estimates have approximately doubled from about 3% to 6% for material stocks. However, average earnings growth estimates have exploded from about 13% to 23%. Median estimates are higher as well as they were just below 10% at the start of the year and now are projected to be around 14%.