Knowledge Leaders Exhibit Less Negative EPS Growth Revisions by Jennifer Thomson, Gavekal Capital Blog
The average change in EPS growth estimates for companies in Developed Markets has fallen 1.4% over the last three months. By geographic region, estimates for the DM Americas has fallen the most (1.7%, led by a 7.0% decline in the Energy sector alone) while DM Asia has been a relative bright spot, falling just 1.0%. Of note, the most resilient sectors overall include counter-cyclicals (Consumer Staples and Health Care) as well as Information Technology.
Turning to Emerging Markets, we find that estimates have declined four time more than in their DM peers. In this instance, Asia stands out as the region with the most negative revisions (-5.0%). Overall, cyclical sectors such as Materials and Industrials led the decline, having fallen 7.8% and 6.9%, respectively.
While the future appears fairly bleak, it is interesting to note that, when we apply our filter to the universe of stocks included here, we find that Knowledge Leaders overall tend to have slightly more optimistic outlooks when it comes to earnings estimates.