Regular readers will know that MB has ridden the dollar-exposed industrials wave since late 2011 to some good effect. Indeed the out-performance has been spectacular:
But many firms making up this basket, perhaps most, have disappointed markets this reporting season. Goldman has more:
Who will be the next US$ name to disappoint? A number of USD$ exposed names have underperformed following FY16 guidance downgrades (CPU, ANN, COH, CSL). TWE could be the next stock to fall victim to this trend given we believe consensus is factoring in too much of a competitive benefit from the lower A$. Having outperformed into its result, the stock is trading on a forward P/E of 24x and expected to deliver 32% EPS growth in FY16. QBE, another high profile US$ name reports Wednesday. While we expect the company to reiterate it full year margin guidance, we expect them to talk to the lower end of their revenue range (reflecting the drag from exchange rates, plus the ongoing pressure on premium rates). Consensus, however seems to already factor in a weak guidance outlook.
