Corbin Advisors Finds Industrial Investor Sentiment Upbeat Amid Bullish Executive Tone and Expectations for Strong Organic Growth
- A record 64% of surveyed investors describe management tone as outright Bullish, significantly above the previous high-water mark of 40% in 4Q17
- 95% expect earnings to meet or beat consensus with 65% predicting sequential improvement
- Confidence in revenue expansion reaches an all-time high heading into earnings season while 2018 organic growth expectations remain elevated at 5.0%+
- Nearly 60% expect operating margins to improve this quarter, up from only 33% in 1Q18, as more than 75% of investors express confidence in companies’ ability to offset cost inflation and tariff impacts through pricing actions
- One-third report Rotating within Industrials, more than double that of 1Q18; significant shifts identified in sub-sector sentiment
HARTFORD, Conn. – July 13, 2018 – Corbin Advisors, a specialized investor relations (IR) advisory firm, today released its quarterly Industrial Sentiment Survey, which reveals expectations for a strong 2Q18, driven by global growth and confidence in management actions to offset rising input costs. The survey, part of Corbin Advisors’ Inside The Buy-side® publication, is based on responses from 26 institutional investors and sell-side analysts globally who actively follow the Industrial sector.
Survey respondents characterizing executive tone as Bullish reaches record levels and has infused investor confidence heading into 2Q18 earnings season. The majority, 65%, forecast sequential improvement and 95% anticipate earnings to be In Line with or Better Than consensus. Indeed, all-time high confidence in revenue growth during the quarter, combined with over 75% of investors anticipating companies will effectively offset cost inflation and tariff impacts through pricing actions, has led to strong expectations this earnings season. Despite headwinds, nearly 60% expect operating margins to improve this quarter, a significant increase from 33% last quarter.
Continuing, investors still believe we are Mid or Mid-to-Late in the Industrial cycle and 64% now expect peak earnings in 2020 or later, an increase from 42% last quarter, as views push out.
Still, investors exhibit some caution as 76% report being Neutral to Bullish or Bullish, down from 83% last quarter. To that end, fewer investors report being Net Buyers and instead confirm Rotating within Industrials, more than double that of last quarter.
Views on the Eurozone, Brazil and U.S. economies softened, with the Eurozone seeing the most significant negative swing. Conversely, survey respondents are most positive on India and Southeast Asia growth prospects in the near-term.
“Despite the threat of rising inflation and interest rates, as well as escalating trade wars, executive tone is described by investors as notably upbeat. This, in turn, has given investors extraordinarily high confidence in this earnings season, as well as the foreseeable future,” commented Rebecca Corbin, Founder and CEO of Corbin Advisors. Ms. Corbin added, “The majority of investors are sensitized to the mounting headwinds but seem focused on rotating within the sector while overlooking growing macro risks associated with this dangerous economic backdrop.”
Regarding sub-sectors, surveyed financial professionals are most bullish on Defense, which saw near-record sentiment for the second consecutive quarter, as well as Commercial Aerospace and Metals & Mining. On the other hand, Auto remains the biggest laggard for the sixth quarter in a row, while bearish sentiment toward Water nearly quadrupled.
Since 2006, Corbin Advisors has tracked investor sentiment on a quarterly basis. Access Inside The Buy-side® and other research on real-time investor sentiment, IR best practices and case studies at www.CorbinAdvisors.com.
About Corbin Advisors
Corbin Advisors is a specialized investor relations (IR) advisory firm that partners with C-suite and IR executives to drive long-term shareholder value. We bring third-party objectivity as well as deep best practice knowledge and collaborate with our clients to execute sound, effective investor communication and engagement strategies. Our comprehensive services include perception studies, investor targeting and marketing, investor presentations, investor days, specialized research, and retainer and event-driven consulting.
Inside the Buy-side®, our industry-leading research publication, is covered by news affiliates globally and regularly featured on CNBC.
To learn more about us and our impact, visit www.CorbinAdvisors.com.
Bronwyn Swanson, 203-283-7997