- 96% of surveyed financial professionals expect earnings to be in line with or better than consensus, surpassing last quarter’s then-record high of 92%
- Those anticipating revenue and EPS improvement more than double QoQ and register at the highest levels recorded in our survey history
- Majority of Trump business-friendly policies expected to pass in 2017 although the majority believe most of the benefits are already priced into industrial stocks
- #TrumpTrade: Defense, Industrial Equipment & Components and Machinery see significant spikes in bullishness while sentiment toward Autos stalls
- Nearly 50% assert industrial stocks are fairly valued; 71% report either holding or rotating while net buyers decline
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Word Cloud: Frequency of Occurrence
Building upon a strong 4Q16, 2017 is off to a good start as post-election optimism continues. Indeed, heading into 1Q17 earnings season, 96% expect industrial earnings to be in line with or better than consensus, with the number predicting misses falling to only 4%. Similarly, management tone continues to strengthen, as 84% now describe executive stances as neutral to bullish or outright bullish.
With regard to the political-economic climate, industrials in particular benefited from the Trump administration’s proposed infrastructure spending bill, which some analysts project can top
Though animal spirits are evident across the industrial landscape, the percentage of net buyers in the sector has declined amid the overwhelming majority view that industrial stocks are fairly to overvalued. As one buy-side investor notes, “Expectations may have gotten ahead of reality as it pertains to reflation and corporate tax reform.”
“Industrials are trading on a wave of positive, pro-growth sentiment emanating from the promise of business-friendly policy in the
The survey also identifies several significant shifts in industrial sub-sector sentiment, as those most likely to benefit from the Trump Administration’s proposals – Defense, Industrial Equipment & Components and Machinery – gained significant favor. Meanwhile, sentiment on Autos is the most bearish and saw the biggest spike in negative views, followed closely by Water.
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