Market Commentary
February 9th, 2019

  • Estimates for Q1 as well as full-year 2019 have been steadily coming down, with 2019 Q1 earnings growth now in negative territory, the first quarterly earnings decline since 2016 Q2.
  • For the small-cap S&P 600 index, total earnings for the 175 index members that have reported results already are up +21.5% on +8.2% higher revenues, with 58.9% beating EPS estimates and 61.1% beating revenue estimates. The small-cap index’s Q4 performance thus far is weaker than we have seen from the same group of companies in other recent periods. Looking at the small-cap index as a whole, total Q4 earnings are expected to be up +6.2% on +7.0 higher revenues. This would follow +36.7% earnings growth on +7.8% revenue growth in Q3.
  • For full-year 2019, total earnings for the S&P 500 index are expected to be up +4.8% on +5.4% higher revenues, which would follow the +20.7% earnings growth on +4.8% higher revenues in 2018. Estimates for 2019 have been steadily coming down, with the current +4.8% growth rate down from +9.8% in early October 2018. 
  • The implied ‘EPS’ for the index, calculated using current 2018 P/E of 17.5X and index close, as of February 5th, is $156.87. Using the same methodology, the index ‘EPS’ works out to $164.33 for 2019 (P/E of 16.7X) and $182.66 for 2020 (P/E of 15.0X. The multiples for 2018, 2019 and 2020 have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.

Featured Recommendation

Spirit airlines, Inc. (SAVE)  $61.44

 

Spirit Airlines Inc. operates an airline based in Fort Lauderdale providing travel opportunity principally to and from South Florida, the Caribbean and Latin America. Spirit Airlines Inc. is based in Miramar, Florida
Target Price  $67.58

FATI® Market Rankings

Market Cap 1 Mth 3 Mth 6 Mth 9 Mth 12 Mth RSR % Stocks Up % Stocks Dwn YTD Return
Mid Caps 5.0% -3.0% -10.0% -7.0% 2.0% 3 15.0% 7.0% 5.56%
Large Caps 6.0% 0.0% -4.0% -3.0% 0.0% 3 17.0% 5.0% 11.36%
Nano Caps 2.0% -6.0% -20.0% -16.0% -8.0% 2 15.0% 6.0% 19.93%
Micro Caps 3.0% -4.0% -14.0% -10.0% -9.0% 2 18.0% 5.0% 14.43%
Mega Caps 4.0% -7.0% -9.0% -9.0% -8.0% 1 17.0% 5.0% 8.00%
Small Caps 3.0% -18.0% -25.0% -19.0% -13.0% 0 22.0% 7.0% 13.16%
FATI® S&G Index 13.00%

FATI® Sector Rankings

Ranking Sector 1 Mth 3 Mth 6 Mth 9 Mth 12 Mth RSR % Groups Up % Groups Dwn YTD Return
1 Basic Materials 5% 7% -1% -4% 0% 6 25.0% 0.0% 23.54%
2 Aerospace 8% -4% -4% 0% 6% 4 50.0% 0.0% 14.80%
3 Finance 7% 1% -4% -4% -1% 4 50.0% 0.0% 15.54%
4 Industrial Products 5% -1% 8% -5% 0% 3 0.0% 0.0% 14.26%
5 Multi-Conglomerate 6% 1% -6% -1% -2% 3 66.0% 30.0% 13.83%
6 Tramsportation 4% -4% 8% -11% -10% 3 16.0% 33.0% 14.25%
7 Medical 4% -10% -15% -6% 4% 3 14.0% 0.0% 14,42%
9 Consumer Discretionary 4% -2% -8% -2% -2% 3 50.0% 0.0% 12.80%
10 Utilities 2% 1% 4% 3% 9% 2 66.0% 0.0% 4.58%
11 Retail/Wholesale 1% -5% -6% 2% 8% 2 14.0% 0.0% 9.59%
13 Business Services 5% -6% -13% -6% -3% 2 20.0% 20.0% 15.91%
14 Consumer Staples 3% -5% -6% -4% -7% 1 0.0% 0.0% 9.54%
15 Computer/Technology 7% -13% -20% -18% -12% 1 50.0% 0.0% 13.87%
16 Construction 2% 0% -15% -16% -18% 1 0.0% 0.0% 13.76%
17 Oil/Energy 1% -9% -17% -18% -7% 0 28.0% 28.0% 14.40%
FATI® S/G Index 13.00%

Long Trades

Ticker %Chg EPS F1 EPS Grth % F1 EPS Grth % F2 # Anlst in F1  Con. Est. P/E using  F1 Est Mkt Cap Millions FATI Score Next EPS Report Date
SPX 0 38.42 43.76 10 15.71 N/A 1.84 20190523
LULU 1.22 69.88 101.97 14 33.78 $19,678 2.52 20190326
WCG 2.29 23.46 49.94 10 20.37 $13,867 2.88 20190507
KL 7.26 108.1 174.65 4 22.59 $7,003 9 20190220
CACI 1.87 31.88 38.87 7 16.98 $4,362 2.1 20190501
SAVE 9.93 51.27 54.22 10 9.23 $4,194 8.95 20190425
DECK 16.53 38.79 42.8 6 17.71 $4,109 1.06 20190523
PFGC 3.27 18.02 31.6 4 21.04 $4,023 1.64 20190508
RXN 3.62 30.34 43.53 6 14.33 $2,720 2.82 20190513
CSTM 11.03 483.75 584.38 5 7.17 $930 11.65 20190221
MBUU 2.41 35 54.17 5 13.07 $926 2.4 20190501
BOOT 8.09 71.14 115.3 5 20.91 $710 0.37 20190521
ZUMZ 2.22 67.12 73.64 6 12.71 $596 2.82 20190321

Short Trades

Ticker %Chg EPS F1 EPS Grth % F1 EPS Grth % F2 # Anlst in F1  Con. Est. P/E using  F1 Est Mkt Cap Millions FATI Score Next EPS Report Date
SPX 0 38.42 43.76 10 15.71 N/A 1.84 20190523
SLB -13.69 -2.1 44.86 15 26.97 $59,163 9.5 20190419
EA -18.87 -8.79 -0.29 8 31.11 $29,241 1.73 20190514
SIRI -19.88 -14.1 2.57 3 26.55 $26,637 9.32 20190424
JKHY -2.41 -0.16 11.48 7 37.01 $10,239 1.08 20190507
UGI -6.28 -0.12 11.92 3 19.44 $9,250 4.71 20190501
MXL -4.94 -1.28 33.33 4 28.22 $1,499 2.81 20190514
RTEC -20.36 -21.48 N/A 4 19.95 $709 10.21 20190501
NANO -43.2 -46.55 -19.62 3 22.94 $704 11.5 20190507
CTRL -35.85 -29.17 25 4 26.6 $483 4.33 20190502

GREEN – Favored Stock
RED – EPS Report ALERT

FATI Score – Measures the dispersion of earnings estimates of analysts. The lower the score the the lower the earnings uncertainty. Scores of 12 or lower are only considered for long trades.

 

Featured Recommendations

Rec. Date Ticker LONG / SHORT % G/L S&P 500 % +/- S&P 500 H/L Price Target Price 8% Stop Price Next EPS Date
1/5/19 LLY $114.66 6.26% -6.50% 12.76% $121.84 $126.13 $105.49 1/30/19
1/12/19 MOS $31.37 4.14% -4.12% 8.27% $32.67 $34.51 $28.86 2/18/19
1/19/19 MOH $136.96 3.04% -1.59% 4.63% $141.12 $150.66 $126.00 2/11/19
1/26/19 BOOT $22.66 15.14% -1.59% 16.73% $26.09 $24.93 $20.85 1/30/19
2/2/19 MRCY $58.11 9.29% -0.05% 9.34% $63.51 $63.92 $53.46 4/23/19
2/9/19 SAVE $61.44 0.00% 0.00% 0.00% $61.44 $67.58 $56.52 4/25/19