Wednesday, July 29, 2009

But Still Better Than Expected........

Thank god that real earnings don´t matter...until they matter.....It will be interesting to see how long the new mantra "Less Bad Is the New Good" can keep this market "elevated"( see Dow Sends Buy Signal That’s Worked Since 1921: Chart of the Day via Bloomberg , needless to say that i think this CHART OF THE DAY: Shades Of 1929is more realistic) ... This cartoon sums it up..... ;-)

Gottseidank wird ja den realen Gewinnen momentan keinerlei Bedeutung beigemessen und das alle Schätzungen auf den berühmt berüchtigten EBITDA bzw Proformabasis ( ex dieses, ex jenes, usw.) basieren......Ansonsten wäre das KGV ( wenn es denn überhaupt vorhanden wäre ) auch zu schockierend...... Dieses Beispiel ist leider keine Ausnahme..... Bin gespannt wie lange der Markt auf Basis "Less Bad Is the New Good" die Party am laufen halten kann ( hier eine weitere atemberaubende Einschätzung via Bloomberg Dow Sends Buy Signal That’s Worked Since 1921: Chart of the Day , ich tippe mal das diese Variante CHART OF THE DAY: Shades Of 1929 wahrscheinlicher ist) ....Denke dieser Cartoon trifft es ziemlich gut...... ;-)

Chart Of The Day
Today's chart provides some perspective on the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today's chart llustrates how earnings are expected (38% of S&P 500 companies have reported for Q2 2009) to have declined over 98% since peaking in Q3 2007, making this by far the largest decline on record (the data goes back to 1936).

In fact, real earnings have dropped to a record low and if current estimates hold, Q3 2009 will see the first 12-month period during which S&P 500 earnings are negative.

Some still call the market "cheap"...... No problem with the right pro forma ( What are pro forma earnings? ) model/formular.... Havn´t heard the word GAAP for a long time....;-)

Gut zu wissen das einige der Experten den Markt immer noch als "billig" betiteln..... Wenn man die richtige "Proformakalkulation" (siehe What are pro forma earnings? ) zugrunde legt sicher kein Problem.... Ich jedenfalls wundere mich schon lange nicht mehr das ich den Gewinnausweis nach der einheitlichen Bilanzierungsvorschrift GAAP nur nach lagem suchen im Kleingedruckten der Quartalsberichte finden kann..... Vor alternativen Analysten und Unternehmenskreationen wie EBITDA ( oftmal noch versüßt durch andere "außerordentliche" Belastungen ) usw. kann man sich in der tagtäglichen Berichterstattung hingegen kaum retten.....;-)

The new equity market consensus FT Alphaville

Another day, another big house predicting further gains for stock markets.

Joining Goldman Squid, Credit Suisse and HSBC, Nomura sees a further upside of 13% for global equities in the second half of the year

In fact this is fast becoming the new equity market consensus. Goldman, for example, is now targeting 1,060 on the S&P 500 by the year-end, on account of better-than-expected results, particularly from the financial sector, while Credit Suisse is looking for 1,050 citing earnings revisions and cash balances and HSBC expects 1,020 because the earnings downgrade cycle is coming to an end.

Here’s how the argument goes, according to a note fired off by Nomura’s Ian Scott to clients on Monday.

second quarter results beat expectations by a wide margin......

the market remains cheap and should have rallied further......

Secondly, we would argue that the market is valued for downgrades to analysts’ forecasts, not upgrades.

With a 12-month forward multiple of 14.1, 17% below the 20-year average multiple.

> I especially like "should have rallied further"...... I highly recommend the "rant" from Michael Panzner on another uber bullish "expert"......

> Finde besonders den Hinweis großartig das die Aktien bisher kaum auf die tollen Ergebnisse reagiert haben und hätten eigentlich viel weiter laufen müssen...... Empfehle in diesem Zusammenhang den weniger euphorischen Blick von Michael Panzner......

> via Zero Hedge

And here is the projected earnings growth rate over the next two quarters, needed to justify the rosy perspective on the economy: the bottom line: over 110% in projected EPS growth in 6 months. A jobless, revenueless doubling in earnings!

> As i´ve said before "with the right pro-forma model".......

> Wie bereits gesagt, wenn man nur genügend "außerordentliche" Posten herausrechnet ist ne Menge "möglich"..... Ein paar Beispiele folgen dank des zeitlich hervorragend passenden nachfolgenden Link.... Analog genügt natürlich ein Blick in jede xbeliebige AD-HOC.... ;-)

Wall Street Analysts Keep Telling Big Earnings Lie David Pauly

July 30 (Bloomberg) -- At a time when the financial industry’s credibility is at an all-time low, you would think Wall Street’s finest would break their necks providing transparency.

Not so. Stock analysts continue to promote corporate earnings lies, insisting that net income isn’t really what investors need to know.

Instead, their earnings estimates ignore often huge expenditures that can’t help but affect a company’s health.

In analystspeak, Intel Corp. wasn’t hit with a $1.45 billion fine from the European Union in the second quarter for anticompetitive practices.

After setting aside funds to cover the fine, which Intel is appealing, the semiconductor-maker had a quarterly loss of $398 million, or 7 cents a share. Disregarding the fine altogether, analysts maintain the company earned 18 cents a share, beating their average estimate of 8 cents.

As Wall Street tells it, the employee stock options Google Inc. granted in the second quarter didn’t cost its shareholders $293 million.

Google, according to generally accepted accounting principles, earned $1.48 billion, or $4.66 a share, in the period. Not enough for Wall Street, which prefers to say the company earned $5.36 a share, leaving out the cost of stock options.

Business journalists know what’s going on ( jmf: really? I have some serious doubts ....?) and in their stories emphasize net income -- which accounting authorities say is where the focus should be. Still, if reporters want to show how the latest report compares with earnings estimates, they are stuck using analysts’ predictions. ...

Viacom Inc., an entertainment company, this week reported second-quarter net income of $277 million, or 46 cents a share. Analysts had estimated profit as if money Viacom paid out in severance in the period wasn’t the real thing. On that basis, Viacom earned 49 cents a share, beating the average estimate by 1 cent.

Time Warner Inc, a rival of Viacom for entertainment dollars, said it earned $519 million, or 43 cents a share, in the quarter. Analysts insist Time Warner earned 45 cents, excluding, according to Bloomberg data, costs related to litigation and asset sales. Lawyers must work for nothing.

By similar Wall Street reckoning, the expense of cutting jobs and selling an asset that reduced McGraw-Hill Cos. second quarter earnings per share by 10 percent was immaterial.

Analysts also say investors should ignore $129 million that Textron Inc., maker of small airplanes, helicopters and golf carts, charged against net income in the latest quarter. Included was the cost of shutting a plant for an eight-seat jet Textron decided not to build.

General Electric Co., which makes jet engines and electric power equipment and has a financial services arm, had a second- quarter profit of 24 cents a share. GE and the analysts emphasized earnings from continuing operations, which at 26 cents a share, exceeded their estimate by 2 cents. A $194 million loss from discarded businesses was discarded.

Wall Street’s big earnings lies must exasperate investors. They already have lost faith in the reported earnings of banks that are the center of the financial system.

The argument is that “adjusted” earnings make for a smoother picture of company performance.

Cooking the books to smooth out earnings from quarter to quarter is what hoodwinked shareholders of Fannie Mae and Freddie Mac several years ago.

Update: Earnings Beat Rate Off The Charts & BIZARRO MARKET

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