Consensus forward Price to Earnings multiples continue to re-rate, will all Macro Sectors trading at or above +1 std to long-term average. On the back of stronger market returns and flat earnings profile, the ASX 200 is trading at 16.2x, ~21% above LT average of 14.1x. Stripping out resources and financials the Industrial ex Financials has moved higher to 18.5x with Resources now trading at 5 year highs of 16.1x.
•Consensus aggregate earnings growth forecasts for FY15 and FY16 have moved lower through reporting season. The market is now forecasting flat earnings growth for FY15 with FY16 falling below 5%, at 4.7%. The Materials (-28.7%) sector continues to be largest contributor to lower market growth forecasts while Industrials (+22.0%) and Health Care (+11.5%) continue to hold double digit growth forecasts.
All good. Those roaring 2017 earnings will save us!
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
