US construction data for October were actually pretty positive for both core non-residential and residential segments. The magic of low rates is starting to take root; continued expansion in payroll and positive credit quality metrics likely support the outlook for modest growth into 2020.
Search Coverage List, Models & Reports
Search Results1-10 out of 236
Bottom line: Daily sales of +5.8% (ex-FX) was ahead of WRe of +4.7%, albeit mix pressures continue as national accounts (+10%) outpace non-national accounts (-1%) and Fastener (+2.4%) growth underperforms Other products (+7.6%). Bottom line, better than the 5% bogey and suggestive of stable activity levels – a sharp contrast to broader data. We continue to see risk to 2020 estimates.
December 2019 Update: Trade momentum has been the guiding light for the global cap goods sector YTD. Given growing concerns that any trade deal pushes into 2020, we think the investors could look to further de-risk into YE, with sector multiples pushing towards peak levels, and with continued risk of downward estimate revisions.
WR CGMI decreased ~3pts to 46.7 in November, with broad based weakness in all regions ex-China. A casual review of our macro and industry KPI tables (Ex 29-31) has become a game of spot the positive data point; CGMI suggests that visibility on a positive inflection remains highly elusive. We have been more vocal about tactical caution following the strong YTD rally and we reiterate that view here. Short cycle stocks look particularly expensive relative to long-cycle (Ex 2), despite above-average earnings risk in that basket of stocks.
We find a pretty powerful mean reversion trend post Thanksgiving, which suggests that leaders have a tendency to fade into YE. With little genuine good news in the industrial data, we think it is time to take money off the table, and perhaps spare some of this year’s turkeys. We hope you enjoy a long Thanksgiving weekend with family and friends!
Our latest look at the global inventory cycle reveals the broad picture of a channel in the midst of a correction that likely lasts for another couple of quarters, driven by electrical, chemical, auto and US big box channels. Manufacturers are in better shape, but A&D, auto, chemical and semi inventory levels remain bloated. The bottom line is that EE/MI sales growth will remain pressured through 1H20.
We know that the term "Internet of Things" generally leads to crossed arms and downed pens, but investor pitches this week from ROK and HON were basically all about IoT business models. This is an important, growing trend and we are generally believers.
The market has gone "All In" on a 2020 soft landing and is now increasingly discounting some level of acceleration through 1H20. We think this is over-cooked - we never really bought into recession, but equally we think 2020 is shaping up as a real slugfest. We are tactically cautious on the EE/MI group at 17.8x P/E - we think EMR/ROK, MMM/ITW and IR/JCI are the most interesting pair trade charts.
Folks – I wanted to send you a complete and up to date compilation of our models post-3Q19 results. Our Model Book also includes cheat sheets and bull/bear target price spreads for each company.
November 2019 Update: Global Cap Goods are on a tear, as the market sees a soft-landing scenario in 2020. But what happens when peakish multiples meet deteriorating fundamentals over the next couple of quarters? This could get hairy.
- 1 of 24
- next →