North American investors are more pessimistic about upcoming first quarter earnings reports than for the previous quarter, while those in Europe and Asia are more upbeat, according to a survey by IR research and advisory firm Corbin Perception.
Half of North American investors expect results in the first quarter to be worse than in the fourth quarter of last year, as the rapid increase in the value of the US dollar against other currencies cuts revenue for local firms that earn money from overseas. Investors also cite the sharp drop in oil prices and a severe winter on the continent. A quarter of those surveyed expect results in line with the previous quarter and another 25 percent predict an improvement.
Investors in Europe are the most optimistic, with 50 percent expecting first quarter results to be better than Q4 2014. Investors say lower oil prices will help European companies, as will increased corporate investment and an easing of deleveraging pressures. About 20 percent of investors expect earnings to be in line with the previous quarter while 30 percent predict a worse result.
In the Asia-Pacific region, where investors were most pessimistic for the last earnings season, 31 percent now predict results will improve in Q1 while the same number expect results to be in line with the previous quarter. Thirty-eight percent say results will be worse than in the fourth quarter.
Globally, 45 percent of those surveyed expect results to be worse than in the previous quarter, up from 30 percent who said the same during the last earnings season. Forty-four percent of investors surveyed say fourth quarter results were better than expected while 48 percent say they were in line with expectations and only 8 percent say they were worse than anticipated.
Before fourth quarter earnings reports were available, however, 30 percent of investors surveyed said they expected worse results.
‘This quarter’s survey can largely be characterized by continued caution, a two-quarter trend,’ write the report’s authors. ‘Investor sentiment appears to be somewhat calibrated to a choppy Q1 2015 earnings season, though the magnitude of the strong dollar on multinationals’ performance is a significant unknown.’
