. This week (ending 2/14/2014), the Energy & Environmental Technologies (E&ET) Index outperformed the broader market and was up 3.5% week-over-week (vs. the S&P 500 Index increase of 2.3%, Russell 2000 increase of 2.9% and NASDAQ Composite increase of 2.9%). This compares to an increase of 3.6% for the Industrial Technologies index. The E&ET Index is +0.6% YTD vs. -0.5% for the S&P 500, -1.2% for the Russell 2000 Index, and +1.6% for the Nasdaq Composite.
. Based on the forward 12-month consensus estimates, the current Price-to-Earnings (P/E) ratio of the E&ET Index of 21.3x, vs. S&P 500 of 15.4x. Since 2000, the historical P/E has average 16.4 x NTM earnings estimates, with a standard deviation of 3.0x, generating a range of 13.4x to 19.3x. This compares to a historical average P/E of 16.4x for the S&P 500.
January U.S. Industrial Production and Capacity Utilization -0.3% and -0.7% m/m.
U.S. Industrial Production data from the Federal Reserve Board fell 0.3% in January after having increased up 0.3% in December. Capacity utilization for the industrial sector decreased 0.7% m/m to 78.5 in January.
The Earnings Season for the E&ET Space to Date Has Been Mixed
with 17 beats, 6 misses and 3 in-line compared to consensus estimates. In terms of management expectation, two companies raised FY14 guidance, four companies reaffirmed guidance, and one company lowered guidance for FY14. Fifteen companies issued upside to in-line guidance for FY14, while three companies issued downside guidance vs. consensus estimates.
We analyze the performance of selected companies in the TBG E&ET index this earnings season. Overall, expectations into earnings were high in the Energy & Environmental Technologies industry and even solid beats resulted in modest stock price appreciation (1-5%) post earnings.
Consensus Estimates Change
. For the week ending 2/14/2014, there were 11 increases and 13 declines in 2014 revenue estimates, and 15 increases and 12 declines in 2014 EPS consensus estimates. This compares to last
week’s 10 increases and 11 declines in 2014 consensus revenue estimates,
and15 increases and 9 declines in 2014 consensus EPS estimates.
. The natural gas rotary rig count decreased to 337 last week, according to data released by Baker Hughes. This represents a decrease of 14 rigs from the previous week. Additionally, the oil rig count increased by 7 to 1,423 active units. The total rig count is 1,764, down seven rigs for the week and up two from a year ago.
ENERGY & ENVIRONMENTAL TECHNOLOGIES PRACTICE
Shawn M. Severson
Ralph K. Fong
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