Sector P/E Data - Might Be Worth A Look
Brian Gilmartin, CFA
9.63K Followers
A reader asked about sector P/Es a few weeks ago - haven't updated the above spreadsheet in a few years:
- Financials - big jump in earnings growth rate, but i do think a lot of that is Berkshire's (BRK.A, BRK.B) gain. Berkshire is now the fifth-largest holding in the S&P 500 by market cap.
- Energy still shocks me - the growth rate has been through the roof the last two years, and the sector has gone nowhere, no doubt due to Exxon's (XOM) and Chevron's (CVX) percentage of the sector.
- Technology should be fine in Q1 '18, but a lot of the big cash repatriation should already be in the numbers.
Don't ignore the sector as a percentage of the S&P 500's market cap either: remember, Technology, Financials, Health Care and Consumer Discretionary (which is really being powered by Amazon and Netflix) make up 67% of the entire index's market cap. Tech, Financials and Health Care are 54%.
When earnings start, focus on the companies that are executing - the big buyback programs don't seem to be driving stock prices unless revenue and execution are present.
Out this week with more on this.
Thanks for reading.
This article was written by
9.63K Followers
Brian Gilmartin, is a portfolio manager at Trinity Asset Management, a firm he founded in May, 1995, catering to individual investors and institutions that werent getting the attention and service deserved, from larger firms. Brian started in the business as a fixed-income / credit analyst, with a Chicago broker-dealer, and then worked at Stein Roe & Farnham in Chicago, from 1992 - 1995, before striking out on his own and managing equity and balanced accounts for clients. Brian has a BSBA (Finance) from Xavier University, Cincinnati, Ohio, (1982) and an MBA (Finance) from Loyola University, Chicago, January, 1985. The CFA was awarded in 1994. Brian has been fortunate enough to write for the TheStreet.com from 2000 to 2012, and then the WallStreet AllStars from August 2011, to Spring, 2012. Brian also wrote for Minyanville.com, and has been quoted in numerous publications including the Wall Street Journal.
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Comments (7)
sgt.red.blue.red
12 Apr. 2018
Brian, does the Real Estate (I'm assuming that means only REIT's) have no earnings? Your posts are a 'must read' for me.
Bespoke hasnt included real estate in their weekly sector snapshot even though the sector was spun-out from Financials in 2016 ? I sent them a note asking them about this. Telco has only 3 companies left in the sector so you would think at some point that R/E would replace telco on the sector snapshot. In the attribution or reference section of the s/sheet i tell readers the sector P.E data is from Bespoke. It is one of the few places i can find it - that and howard silverblatt of Standard and Poors.
g
greyheli
09 Apr. 2018
Awesome I love this sector table. Energy valuations don’t surprise me. I’ve sold out of most of my energy, utilities, materials. Materials PEG at 0.91 deserves a look. Financials look enticing but honestly I can’t fathom bank stock balance sheets. Mostly I’m in tech & healthcare now.
R
Robin Heiderscheit
09 Apr. 2018
Do the P/E calcs include only companies with positive earnings? Thanks for posting . . . I am a born pessimist so I rely on you and a handful of others to keep me in the game lol.
telco is the only sector with negative earnings growth Robin. Every other sector is profitable and growing. Note the 2016 PEG for telco. however by math, a sector would need some growth and profitbaility to make the PEG ratio meaningful. Sectors w/out earnings growth wouldn't have a P.E or PEG so to speak.
thx, 268.
26891393
09 Apr. 2018
As always, Brian, thanks for your valuable SA contributions. The sector table provided much needed investment guidance for this old retiree.....
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