Leigh Drogen is the Founder and CEO of Estimize. Estimize is an open financial estimates platform which facilitates the aggregation of fundamental estimates from independent, buy-side, and sell-side analysts, along with those of industry experts, private investors and students. By sourcing estimates from a diverse community of individuals, Estimize provides both a more accurate and more representative view of expectations compared to sell side only data. Leigh started his career as a quant trader at Geller Capital, a White Plains, NY based fund where he ran strategies that looked at earnings acceleration and analyst estimate revision models, as well as price momentum and several sentiment indicators. Leigh later went on to be the founder of Surfview Capital, a New York based asset management firm that used many of the same strategies as Geller Capital, with a focus on higher beta names on an intermediate term time frame. His educational background includes focus in economics and international relations, specifically war theory. He is a graduate with honors from Hunter College in New York City. You can contact Leigh by emailing him at Leigh@estimize.com
Retailers Wrap up the Q1 Earnings Season: Gap Inc (GPS)
The earnings season is winding down with the typical parade of retail reports, and the results have mostly been good. Some standouts include Home Depot, TJX Companies and Target. The biggest disappointment, of course, being Wal-Mart. Headwinds such as the stronger dollar, West Coast port strikes and wage increases caused the retailer to miss both top and bottom-line expectations by a large margin.
Tonight we get results from Gap Inc (NYSE:GPS). The struggling retailer has a new CEO that is hoping to turn things around. The Estimize community is looking for EPS of $0.58, 2 cents higher than the Street’s expectation. Revenues are anticipated to come in at $3.8B, surpassing the Wall Street consensus by $106M. Both the top and bottom-line estimates would put Gap roughly in-line with year-ago results. However, recent Q1 SSS results don’t bode well for the company, with the namesake Gap brand and Banana Republic posting declines of 10% and 8% for the quarter. Only their lower-end division, Old Navy, saw an increase of 3%. And it’s not only the fundamentals that are looking weak, the stock has fallen 8% since the beginning of the year.
Economic indicators also came in mixed this week. Housing Starts were strong on Tuesday morning, with a reading of 1.14M for April, growing 20% MoM, the biggest gain in 7 ½ years. Many took this as a sign that spring momentum in housing is here. However, this morning we received disappointing results for Existing Home Sales which fell 3.3% from March. The Philly Fed Business Outlook also showed that Mid-Atlantic manufacturing activity is slow, but stabilizing. Yesterday’s FOMC minutes indicated that the Fed believes weakness in macro conditions in the beginning of this year are only transitory, but it is unlikely there will be a rate hike in June.
How are we doing?
Expectations for S&P 500 earnings growth for the first quarter stand at 2.0%, a nice improvement from the -1.5% expected at the beginning of the season. On the flipside, revenues are anticipated to decline 2.3%.
Health Care (20.9%). Notable industry: Biotechnology (41.3%).
Financials (12.4%). Notable industry: Capital Markets (18.4%)
Health Care (10.1%). Notable industry: Biotech (28.4%).
Information Technology (6.7%). Notable industry: Internet Software & Services (21.9%)
Energy (-54.2%). Notable industry: Oil, Gas and Consumable Fuels (-65.1%)
Materials (-0.3%). Notable industry: Construction Materials (-85.7%)
Energy (-36.5%). Notable industry: Oil, Gas and Consumable Fuels (-39.4%).
Materials (-9.3%). Notable industry: Paper and Forest Products (-21.3%).
Earnings: With 479 S&P 500 companies reporting thus far, 53% have beaten the Estimize consensus, 37% have missed and 10% have met. This is compared to Wall Street estimates, of which 67% of companies have beat on the bottom-line, 23% have missed and 10% have met.
Revenue: 36% have beaten the Estimize consensus, while 64% have missed. For revenues, 43% of companies have beat the Wall Street estimate, while 57% have missed.