Corbin Advisors : Releases Voice of Investor™ Q4’19 Industrial Sentiment Survey

Findings Reveal Investor Sentiment Continues to Rebound After Falling to the Most Bearish Level Since 2015 For the second consecutive survey, those classifying themselves as Bullish or Neutral to Bullish increased from 34% to 54%; perceived management tone is described as more optimistic While 48% predict sequential earnings deceleration following a number of Q4 guide-downs, 54% now expect results to come In Line with consensus, more than doubling QoQ; only 31% expect Worse Than results, down from 55% EPS, Revenue Growth and Operating Margins are expected to Stay the Same and all see decreases in Worse Than views Prior to the Phase 1 tariff deal and Mnuchin’s comment that Phase 2 may not remove all tariffs, 67% believed a favorable resolution to the U.S./China tariff dispute by the 2020 U.S. Presidential election was probable Nearly 80% expect global capex to Stay the Same or Improve, up from 44% last quarter, while only 5% expect a U.S. recession in the next 12 months Click Here to Access the Full Report

Corbin Advisors, a research and advisory firm specializing in investor relations (IR), today released its Voice of Investor™ Industrial Sentiment Survey. The survey, part of Corbin Advisors’ Inside The Buy-side^® publication, is based on responses from 28 institutional investors and sell side analysts globally who actively follow the industrial sector. Buy side firms manage nearly $1 trillion in assets and have ~$101 billion invested in industrials.

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Word Cloud: Frequency of Occurrence Investor Feedback Indicates More Upbeat Sentiment (Graphic: Business Wire)

Following three consecutive quarters of deceleration, nearly all key performance indicators – Revenue, EPS and Margins – are expected to Stay the Same. Indeed, all measures saw decreases in Worse Than views. Free cash flow, which registered its most downbeat sentiment since June 2015 last quarter, saw a significant increase in favorable views, with 62% forecasting Improvement. While 48% predict continued sequential earnings deceleration, 54% anticipate results will be In Line with consensus, more than doubling quarter-over-quarter.

Underscoring a rebound in sentiment, 54% describe themselves as Bullish or Neutral to Bullish, an increase from 34% last survey. Only 28% are Bearish or Neutral to Bearish, well below 50% last quarter. However, expectations for 2020 guidance outlooks are divided, with one-third each expecting Stronger, In Line and Weaker guidance relative to 2019. Notably, 42% of surveyed buy side participants are expecting 2020 outlooks to be Stronger Than 2019 compared to only 14% of sell side analysts.

Still, a level of uncertainty remains as concerns with the geopolitical environment and the upcoming U.S. Presidential election in November are prominent. While 67% suggested a favorable resolution to the U.S./China tariff dispute by the 2020 U.S. Presidential election was Likely, Very Likely or Will Happen prior to the Phase 1 tariff deal, 65% continue to cite trade war as a top concern.

Continuing, only 52% report industrial stocks are Overvalued, in line with last quarter. Indeed, 50% report Rotating or being Net Buyers. Balance sheet strength remains a top focus, with 53% preferring Net Debt-to-EBITDA levels less than 2.0x, up from 35% last quarter. In addition, cost-cutting initiatives, aftermarket components and consolidation stories are seen as compelling investment themes.

“Industrial sentiment in 2019 was marked by increasingly downbeat views on all key performance indicators amid tariff-induced shocks, specifically weakening demand and industrial production. Corporations have shown once again how resilient they are, working through increased costs and resultant slowing growth. Following third quarter results that were weak but not as bad as expected, industrial investor sentiment is increasingly optimistic amid a more positive executive tone, the strongest balance sheets we’ve seen in recent history and expectations for improved free cash flow and margin resiliency,” said Rebecca Corbin, Founder and CEO of Corbin Advisors.

In terms of sector bets, Defense remains the top pick among industries for the ninth consecutive quarter, while Distribution and Non-Residential Construction saw the most meaningful improvements in bullish sentiment. Agriculture bears registered above Auto, which had been the laggard for 14 consecutive quarters.

Since 2006, Corbin Advisors has tracked investor sentiment on a quarterly basis. Access Inside The Buy-side^® and other research on real-time investor sentiment, IR best practices and case studies at CorbinAdvisors.com.

About Corbin Advisors

Corbin Advisors is a specialized investor relations (IR) advisory firm that partners with C-suite and IR executives to drive long-term stakeholder value. We bring third-party objectivity as well as deep best practice knowledge and collaborate with our clients to execute sound, effective investor communication and engagement strategies. Our comprehensive services include perception studies, investor targeting and marketing, investor presentations, investor days, specialized research, and retainer and event-driven consulting.

Inside The Buy-side^®, our industry-leading research publication, is covered by news affiliates globally and regularly featured on CNBC.

To learn more about us and our impact, visit CorbinAdvisors.com.

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