Continental Europe continues to steam ahead with the greatest upward profit revisions in Germany and the Nordic region.
- M&A continues to be the hot story and highlights the general under-valuation of equities in a helpful economic environment. But if it continues at its present rate it will amount to a frightening 10% of world stock market capitalisation this year; it could indicate a new financial bubble.
- Profit warnings is indicative of the flat market, however the breadth ratio (analyst sentiment) is up 5% in the month.
- Chemical, Insurance and Financial Services sectors continue to have the strongest 3-month 2007 profit revisions. TMT and Oils remain soft.
In the Numbers
- DJ STOXX 600 2007 EPS growth rate is 6.4% compared to 16.5% last year
- DJ STOXX 600 2007 P/E trades at
Valuation
|
|
Trailing 12M P/E |
Forward 12M P/E |
Dispersion
|
|
Travel & Leisure |
19.9 x |
16.7 x |
17.5 x
|
|
Industrial Goods & Services |
19.6 x |
16.7 x |
-2.9 x
|
|
Automobiles & Parts |
16.1 x |
13.2 x |
-2.9 x
|
|
Industrial |
19.1 x |
16.6 x |
-2.5 x
|
|
Technology |
19.8 x |
17.5 x |
-2.3 x
|
|
DJ Stoxx 600 |
15.0 x |
13.9 x |
-1.1
|
Best – Weekly Performance (1 week 2007 EPS revisions %)
DJ Stoxx /2/ Automobiles & Parts 5.0%
DJ Stoxx /2/ Chemicals 3.7%
DJ Stoxx /2/ Financial Services 3.3%
DJ Stoxx /2/ Oil & Gas 1.9%
Worst – Weekly Performance (1 week 2007 EPS revisions %)
DJ Stoxx /2/ Insurance -1.3%
DJ Stoxx /1/ Health Care -0.8%
DJ Stoxx /1/ Technology -0.6%
DJ Stoxx /1/ Telecommunications -0.5%
European Earnings Score
Good, Bad and the Ugly
|
|
EPS |
Pretax |
Sales |
|
Good |
60% |
38% |
42% |
|
Bad |
28% |
34% |
29% |
|
in-line |
12% |
29% |
29% |
Cost cutting continues to be the main catalyst.
M&A in the Forefront
Rumors, and transactions continue to spur equity markets. European markets are up about 8% from the beginning of the year, however there is a real fear. The bogyman in this case is private equity. If it continues at its present rate it will amount to a frightening 10% of world stock market capitalisation this year, which could indicate a new financial bubble.
These views are independent of FactSet Europe Ltd and are proprietary to Bobby Rakhit. For the full report and individual sector reviews and recommendations please contact rakhitreport@yahoo.co.uk.