indexes in this article
Profit consensus on the brink, market commentary by Christopher Kalbhenn
Frankfurt (ots) – The terrible news about human suffering and the
The destruction caused by Russia’s attack in Ukraine appalled them
World. About three weeks into the war, something else begins
else to become clear. The economic consequences of the war and
Sanctions against the aggressor Russia – including very sharp increases
Energy prices, a worsening of supply chain problems and the failure of the
Russian market for many companies – make themselves throughout
World economy and especially in Europe increasingly noticeable. through the
War, according to the OECD, will increase global growth this year by more than one
percentage point lower and inflation down by at least two
increase additional percentage points. The rising prices of metals could
according to the OECD cause problems in many sectors of the economy, such as in the aircraft
and vehicle construction as well as in semiconductor production. The ones through the war
triggered supply shortages for raw materials exacerbate the supply disruptions.
Especially Europe and last but not least Germany with its close
economic interlocking with Eastern Europe always get the effects
felt more strongly, as the news of the past few days clearly shows.
For example, the Institute for the World Economy has its forecast for the German
Growth cut from 4% to 2.1% this year: “The war in Ukraine
leads to high raw material prices, new supply bottlenecks and dwindling ones
Sales opportunities.” 60% of the companies, according to the German Industry and
Chamber of Commerce Day, report additional supply chain disruptions from war.
Similarly, the news from important industries. The Association of
chemical industry its forecasts for sales and production increases from 5
% or 2% collected. More than half of the member companies are now expecting
a decline in sales and production. The Association of German Machine and
Plant manufacturing downgraded its output growth forecast for this year to 4% from 7%
% cut.
All of this cannot remain without consequences for the stock markets. the
Market participants will probably have to abandon the idea that the
Profits of listed German companies after last year’s jump
2022 will continue to grow moderately, ie in the high single-digit percentage range.
The Dax is currently appearing after the price slump triggered by the war
a price-to-earnings (P/E) ratio of 12.9 on a
consensus earnings estimates for the year to be relatively cheap.
However, the P/E is based on a consensus estimate for the aggregate
Dax earnings per share, which is still just over 1,100 points and
has practically not changed compared to the beginning of the year. In order to
it is foreseeable that the consequences of the war still have to be incorporated and
the consensus estimate will go down.
Now the index consensus is a sluggish indicator. The many individual stock analysts
who feed it do not adjust their profit forecasts in one fell swoop
push of a button, but first have to recalculate. To make matters worse,
that they are not yet able to properly assess how great the need for adjustment is
will be down. No one knows how long the conflict will last and how big
the economic damage will ultimately fail. After all, Commerzbank has
made a top-down estimate and now assumes that the profits of the
Dax companies not up nearly 7% this year as assumed by consensus
increase, but will decrease by 5%. The first quarter earnings season
which starts in a few weeks will be very exciting. Probably he will
Profit consensus drop noticeably when the numbers work the first traces of
Reveal the consequences of war and the companies adapt their outlook to the new
adjust reality.
However, the decisive factor for the extent of the forecast reductions will be the
further development of the war. In the weeks leading up to the beginning of
A lot can happen in reporting season. In this respect, they will too
Company reports and the falling analyst estimates the stock market
don’t necessarily put them under a lot of pressure. Would there be a compromise between
Ukraine and Russia or a more concrete ceasefire would emerge
the Dax go through the roof even with falling profit forecasts. That’s for sure
only that the stock market will continue to fluctuate heavily in the coming weeks
will show.
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