The Revenue Recession

If you thought estimates for earnings growth were low (we discussed this yesterday), wait til you see what The Street is estimating for revenue growth. 

Nicholas Colas is calling this “the Revenue Recession” in his note this morning for ConvergEx Group, where he is chief market strategist (emphasis mine):

***

Wall Street analysts have continued to curb their enthusiasm about revenue growth for Q2 2013, now posting an average increase of just 0.7% for the 30 companies in the Dow. Take out the financials, and the average drops to just 0.2%. Yes, Alcoa may have “Beat” revenue expectations tonight, but the comparison to last year was still negative.

Analysts have been trimming their numbers for almost a year – the average expected revenue growth for the Dow was a healthy 4% back in October 2012. The current average estimate is the lowest level of expectations since the Street started posting quarterly estimates for the just-completed quarter.

The trend here is oddly reminiscent of Q1 2013, where analysts hacked away at their revenue forecasts but still managed to miss the inflection point through zero. Actual results were negative 0.6%, with negative 0.1% for the non-financial names in the Average.

Wall Street is still more sanguine about the back half of the year – revenue growth expectations average 2.8-2.9% for the next two quarters. Given the direction of Q2 estimates, however, it will not be a surprise to note that these numbers were 4-5% back in March 2013.

If the second quarter of 2013 follows the same cadence as the first, with final results negative versus very modest positive expectations now, we will have two quarters of negative revenue growth. There, in an unwelcome nutshell, is your “Revenue recession”.

At the same time, literacy rates are reasonably high in America, especially if you have enough money to care about the stock market. So let’s assume markets generally understand that, on average, some of the very best-run large companies on offer currently find it impossible to grow their business. Does that merit a 15% year-to-date return? Or a 15-16x earnings multiple?

***

Josh here – Low expectations are a positive or investors – provided there is a reasonable chance they can be beaten. Are we too rosy about the prospects of a second-half pickup in sales? 

Source:

ConvergEx Group

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Zeitarbeitsfirma Pflege Neumuenster commented on Sep 15

    … [Trackback]

    […] There you can find 27753 more Info to that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  2. THC VAPE Cartridges for sale commented on Sep 23

    … [Trackback]

    […] Here you will find 44182 additional Information on that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  3. 메이저놀이터 commented on Oct 16

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  4. jdrywall.com commented on Oct 19

    … [Trackback]

    […] Read More on on that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  5. cc store commented on Nov 16

    … [Trackback]

    […] Here you can find 75027 more Info on that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  6. casino malaysia online commented on Nov 20

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  7. rolex replica commented on Nov 26

    … [Trackback]

    […] Read More on on that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  8. replica rolex commented on Dec 15

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  9. Azure DevOps commented on Dec 18

    … [Trackback]

    […] There you can find 36546 more Information to that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  10. 스포츠토토365 commented on Dec 28

    … [Trackback]

    […] Read More Info here to that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  11. cats having fun commented on Dec 31

    … [Trackback]

    […] Read More Information here on that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  12. rolex replika commented on Jan 16

    … [Trackback]

    […] Read More to that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  13. LG GSL325PVCV manuals commented on Jan 20

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]

  14. Eton SOULRA - manuals commented on Jan 22

    … [Trackback]

    […] Read More on on that Topic: thereformedbroker.com/2013/07/09/the-revenue-recession/ […]