Index Analyzer December 217 Select Sector Indices Evaluate Select Sector Indices based on investment merit using fundamental data and analysis Compare sectors with ease on a variety of forward-looking valuation metrics Succinct reports in three easy-to-read sections: Investment Summary, Fundamentals, and Composition 217 AltaVista Research, LLC. All rights reserved. Important additional disclosure information can be found on page 2.
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Data Definitions & Reliability AltaVista believes the information contained in this report to be reasonably accurate at the time of publication, but makes no warranties with respect to its accuracy. Calculations of fundamental data are based on a weighted average of consensus estimates and reported results for current index constituents. As a result, historical figures for fundamental data such as dividends per share may not reflect those actually paid by firms in the index. To the extent that index reconstitution and rebalancing have altered index composition, these differences may be significant. Definitions for some commonly used financial terms are as follows: Earnings/Net Income: Unless denoted as a GAAP figure, earnings are calculated on a pro forma basis using consensus EPS results/estimates for the individual constituents of each index, multiplied by the float-adjusted shares in the index. For Real Estate Investment Trusts (REITs), the consensus per-share figure for funds from operations, or FFO, is used in place of EPS data. Cash Flow: Adds depreciation and amortization to consensus earnings estimates Standard deviation: Statistical measure of price volatility using 3 years of monthly return data. Figures are annualized. Beta: Measures relative volatility of a given sector index versus the S&P by comparing 3 years of monthly return data. Book Value: Common Equity as reported by index constituents according to GAAP. Forecasts reflect pro-forma calculations using most recently reported figures, plus earnings less dividends. Dividends per share: Dividends paid by companies in the index on a pro forma basis. Payout ratio: Dividends as a percentage of Earnings/Net Income in a given year. Return on Equity: Net income divided by average common equity over the period. Debt-to-equity: Ratio of long- and short-term debt to owners equity. Long-term growth: Uses consensus estimates of 3- year earnings growth for individual constituents of each index to calculate a floatadjusted earnings-weighted growth rate for the index as a whole. Trend in Current FY Estimates: Illustrates changes in consensus estimates over time by examining the monthly change in current fiscal year EPS estimates for individual constituents of each index. Base period is set equal to 1. Price-to-Earnings, -Cash Flow, -Sales and -Book Value: Valuation multiples derived by dividing the index price by the per-share figures for earnings, cash flow, sales and book value, respectively, as per the 'per share results & estimates' for each index. HowWeRateIndices For every index under coverage, we calculate a rating based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to-Book Value multiples. Then, we separate the indices into five tiers based on their individual scores. Although one index's score and recommendation are independent of other indices' rankings, our coverage universe has a roughly normal distribution among the five tiers, with accounting for the largest number of indices. The five tiers are as follows: SPECULATIVE: Deeply undervalued but risky relative to the S&P. A rating of SPECULATIVE indicates exceptional appreciation potential in our opinion. However, firms in this index may also have deep structural issues, which can carry extra risk. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to-Book Value multiples. : Above average appreciation potential relative to the S&P. A rating of indicates that stocks in this index are trading at attractive valuations and/or have above-average fundamentals. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to-Book Value multiples. :. A rating of indicates that valuations adequately reflect the fundamentals of stocks in these indices. The majority of indices we cover fall into this category. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to-Book Value multiples. : Below average appreciation potential relative to the S&P. A rating of indicates that stocks in this index are trading at relatively expensive valuations and/or have below-average fundamentals. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to-Book Value multiples. : A rating of indicates poor appreciation potential relative to the S&P, but some indices in this category consist of stocks for which our fundamentally-driven analysis may be less relevant, especially for early-stage growth companies. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to-Book Value multiples. Additional information is available upon request. 217 AltaVista Research, LLC. All rights reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy.
Table of Contents Index Analyzer: Select Sector Indices Valuation Guide 4- IXY Consumer Discretionary Select Sector Index 6 IXR Consumer Staples Select Sector Index 7 IXE Energy Select Sector Index 8 IXM Financial Select Sector Index 9 IXV Health Care Select Sector Index 1 IXI Industrial Select Sector Index 11 IXB Materials Select Sector Index 12 IXRE Real Estate Select Sector Index 13 IXT Technology Select Sector Index 14 IXU Utilities Select Sector Index ALPS Portfolio Solutions Distributor Inc. is distributor for the Select Sector SPDR Trust. 217 AltaVista Research, LLC. All Rights Reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure
Valuation Guide Select Sector Indices November 3, 217 This page provides a summary of valuation metrics for the Select Sector Indices and S&P which may be considered when buying or selling a fund tracking these indices. Price-to-earnings ratio (on 217E EPS) 4 3.1 3 2 22. 21.2 17. 19.7 17.8 21.2 21.4 2.6 19. 1 Discretionary Staples Energy Financials Real Estate Health Care Industrials Materials Technology Utilities Efficiency Metrics* Risk measures: Standard Deviation Avg. ROE Asset Assets/ Debt/ Prices Earnings Est. (13-17E) Turnover Equity Equity (3yr Ann.) 217-18E Discretionary 21.1%.82x 3.7x 1.4x 11.7% 3. Staples 24.3% 1.1x 2.9x 1x 9.9% 1.7% Energy 7..8x 2.2x.6x 18. 14.% Financials 9.3%.7x 8.x 1.4x. 2. Real Estate 16.1%.18x 2.8x 1.4x n/a n/a 1. Health Care 21.7%.76x 2.x.7x 12.3% 2.1% Industrials 22.3%.69x 3.7x 1.2x 11. 2. Materials 17.3%.6x 3.2x 1.1x 16. 6.3% Technology 23.%.2x 2.x.6x 13. 4. Utilities 1.7%.26x 3.9x 1.4x 12. 2.1% *most recent FY available, except averages as noted Valuation multiples (based on 217 estimates) P/E PEG P/CF P/Sales P/BV Discretionary 22. 2.2 14. 1.7 4.2 Staples 21.2 2. 16.6 1. 4.7 Energy 3.1 2. 1.3 1.4 1.9 Financials 17. 1.7 18.6 2.7 1. Real Estate 19.7 2.3 18.8 6.4 3. Health Care 17.8 2..8 1.9 3.4 Industrials 21.2 2. 14.7 2. 4. Materials 21.4 2.2 13.1 1.6 3.4 Technology 2.6 1.9 14.9 4. 4.7 Utilities 19. 4.1 8.4 2.1 2. S&P 2.2 2. 14.4 2.2 3.1 Earnings per share growth % 297% 3 217 218 1% % % -% Discretionary Staples Energy Financials Real Estate Health Care Industrials Materials Technology Utilities Note: All valuation metrics on this page calculated based on consensus estimates of current index constituents, as collected by Bloomberg and FactSet. Definitions of technical terms can be found on page 2 of this document. 217 AltaVista Research, LLC. All Rights Reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure
Valuation Guide Select Sector Indices November 3, 217 Trends in P/E and P/BV multiples This page contains historical price-to-earnings (P/E) and price-to-book value (P/BV) multiples based on rolling twelve-months' earnings and book value per share figures, respectively, for each Select Sector Index (maximum value of 1). It illustrates how these indices have traded in the recent past in relation to these two valuation metrics. Investors may consider this along with other data and information when buying or selling any security tracking these indices. Consumer Discretionary Select Sector 2. 2 4. 3. 1 2. 1.. 212 213 214 2 216 217 218 Consumer Staples Select Sector 24 18 12 6. 4. 2. 6. 212 213 214 2 216 217 218 Financial Select Sector Energy Select Sector 12 1 8 6 4 1. P/E (left) 2. P/BV (right). 212 213 214 2 216 217 218 *Note: maximum P/E = 1, may also indicate losses Health Care Select Sector 3. 2. 2. 1. 2 2. 1. 2 4. 3. 1 1. 1 2... 212 213 214 2 216 217 218 1.. 212 213 214 2 216 217 218 Industrial Select Sector 2 2 1. 4. 3. 2. 1.. 212 213 214 2 216 217 218 Materials Select Sector 2 4. 3. 1 2. 1.. 212 213 214 2 216 217 218 Technology Select Sector 2. 4. 3. 1 2. 1.. 212 213 214 2 216 217 218 Utilities Select Sector 2 2. 2. 1. 1 1... 212 213 214 2 216 217 218 217 AltaVista Research, LLC. All Rights Reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure
Consumer Discretionary Select Sector Index IXY AS OF 11/3/17 973.37,2, 8 6 4 2 26 28 21 212 214 216 218 The Consumer Discretionary Select Sector Index is a modified cap-weighted index. The index is intended to track the movements of companies in the S&P that are involved in consumer cyclical or transportation industries. The index was established with a value of 2 on June 3, 19. One year 2. Five year 17. Ten year 12.7% Since inception 8. *as of 11/3/17. See Notes. Beta vs. S&P 1. Standard deviation 11.7%. A rating of indicates that stocks in these indices. The majority of indices we cover fall into this category. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to-Book Value multiples. S&P SPECULATIVE 212 213 214 2 216 217E 218E CAGR Sales 43.38 48.14 478.8.7 61.8 79.3 616.67.9% Earnings 29. 33.2 33.74 38.87 41.8 43.28 47.14 8.% Book Value.1 17. 166.63 167.43 22.94 232.9 26.27 8.% Dividends 7.69 8.72 1.41 12.46 12.67 13.26 14.19 11.% Sales growth. 4.% 4. 12.3% 3.1% 6. EPS growth 11.9% 2.1%...3% 8.9% With consumer confidence at a 17-year high, bricks-and-mortar retailers are duking it out with online heavyweights like Amazon. All the competitions appears to be resulting in declining Return on Equity--not good. Meanwhile the sector recently broke out of its fairly narrow P/E range of 18-2x forward earnings in place since 213 (see Historical P/E graph below) and is richly valued in our view, but inline with the broader S&P. % 1% % 1% 217E 218E Price-to-Earnings 22. 2.7 Price-to-Cash Flow 14. 13.1 Price-to-Sales 1.7 1.6 Price-to-Book Value 4.2 3.7 % % 96 212 214 216 218 212 214 216 218 22 2 18 Top 1 Constituents 16 AMAZON.COM INC 16. 14 Autos & HOME DEPOT INC 7.% parts 12 Leisure COMCAST CORP-CL A 6.% Durables 1 WALT DISNEY CO/THE. 8 MCDONALD'S CORP. 6 PRICELINE.COM INC 3. 212 213 214 2 216 217 218 NETFLIX INC 3. *based on twelve months' forward EPS (max value of 1) STARBUCKS CORP 3.% Media TIME WARNER INC 2.9% Other Fundamental Data NIKE INC -CL B 2. TOTAL 7. LT growth est. 1. Payout ratio 3. Retail Constituent Allocation Debt-to-equity 1.4x No. of constituents 84 Weighted avg mkt cap (mns) $16,193 Med mkt cap (mns) $12,373 Large cap ( >$1bn) 9.1% Mid cap ($2-1bn) 4.9% Small cap ( <$2bn).% 14 12 1 217 AltaVista Research, LLC. All rights reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure
Consumer Staples Select Sector Index IXR AS OF 11/3/17 61.9 7 6 4 3 2 1 26 28 21 212 214 216 218 The Consumer Staples Select Sector Index is a modified capweighted index. The index is intended to track the movements of companies in the S&P that are involved in the development or production of consumer goods. The index was developed with a value of 2 on June 3, 19. One year 14.% Five year 12. Ten year 9. Since inception 6. *as of 11/3/17. See Notes. Beta vs. S&P. Standard deviation 9.9%. A rating of indicates that stocks in these indices. The majority of indices we cover fall into this category. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to- Book Value multiples. S&P SPECULATIVE 212 213 214 2 216 217E 218E CAGR Sales 332.81 34.33 348.37 33. 361. 371.32 386.21 2. Earnings 22.67 24.3 24.76 24.4 2.24 26.48 28.3 3. Book Value 94.39.82 93.38 18.68 18.68 119.14 131.62 4. Dividends 1.23 12.2 12. 14.8 14.13.94.94 9.3% Sales growth 2. 2.3% 1.3% 2. 2. 4.% EPS growth.9% 3.% -.9% 2. 4.9% 7.7% Consumer Staples have lagged the S&P considerably, beating only the Energy sector this year, as investors reevaluate the sector in light of the threat of higher interest rates and better earnings growth elsewhere. Consensus forecasts for faster revenue growth and further margin expansion in 218 seem optimistic to us. Valuations remain rich in an absolute sense, and P/Es may be in a downward trend. 3% % 1% % % % 212 214 216 218 Top 1 Constituents PROCTER & GAMBLE CO/THE 12. COCA-COLA CO/THE 1.1% PHILIP MORRIS INTERNATIONAL 9.3% PEPSICO INC 9.% ALTRIA GROUP INC 7.% WAL-MART STORES INC.1% 217E 218E Price-to-Earnings 21.2 19.7 Price-to-Cash Flow 16.6.6 Price-to-Sales 1. 1. Price-to-Book Value 4.7 4.3 COSTCO WHOLESALE CORP 4.1% *based on twelve months' forward EPS (max value of 1) CVS CAREMARK CORP 4.% MONDELEZ INTERNATIONAL INC-A 3. Other Fundamental Data COLGATE-PALMOLIVE CO 3. TOTAL 68.% LT growth est. 8. Payout ratio 6. Constituent Allocation Debt-to-equity 1.x No. of constituents 34 Weighted avg mkt cap (mns) $129,42 Med mkt cap (mns) $2,29 Large cap ( >$1bn). Mid cap ($2-1bn) 1. Small cap ( <$2bn).% 212 214 216 218 HH & Personal Products 12 11 1 99 Food, Bvg & Tobacco 217 AltaVista Research, LLC. All rights reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure Food & Staples Retail 22 2 18 16 14 12 1 212 213 214 2 216 217 218
Energy Select Sector Index IXE AS OF 11/3/17 694.67 1,2 1, 8 6 4 2 26 28 21 212 214 216 218 The Energy Select Sector Index is a modified capitalizationweighted index. The index is intended to track the movements of companies in the S&P that are involved in the development or production of energy products. The index was established with a value of 2 on June 3, 19. One year -4.1% Five year 2.1% Ten year 1. Since inception 8. *as of 11/3/17. See Notes. Beta vs. S&P 1.7 Standard deviation 18. A rating of indicates poor appreciation potential relative to the S&P, but some indices in this category consist of stocks for which our fundamentally-driven analysis may be less relevant, especially for early-stage growth companies. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to-Book Value multiples S&P SPECULATIVE 212 213 214 2 216 217E 218E CAGR Sales 788.39 773.23 748.36 4. 418.86 2. 33.48-8. Earnings 8.26 6.66 7.2 21.2 4. 19.79 27.27 n/m Book Value 48.6 43.19 48.48 388.22 368.2 369.3 376.41 n/m Dividends.93 18.17 2.9 22.28 19.1 19.7 2.21 3.7% Sales growth -1.9% -3. -33.3% -.9% 19.9% 6.1% EPS growth -2.7% 1.% -62. -76.% 297.1% 37. Profits are rebounding from very depressed levels of the last two years--and revisions recently turned upwards--but investors should be prepared for oil prices staying "lower for longer" as most shale producers can further ramp up production on any spike in prices. Energy stocks might be attractive if the lousy profitability for 2-17E is temporary rather than a "new normal," but we don't think that's likely to be the case. Energy has the lowest rating of any sector. 1 1 1 1% % 212 214 216 218 1% % 217E 218E Price-to-Earnings 3.1 2. Price-to-Cash Flow 1.3 8.4 Price-to-Sales 1.4 1.3 Price-to-Book Value 1.9 1.9 12 1 Top 1 Constituents 8 EXXON MOBIL CORP 23.7% 6 CHEVRON CORP 16.9% 4 SCHLUMBERGER LTD 6.9% CONOCOPHILLIPS 4.9% 2 EOG RESOURCES INC 4.% OCCIDENTAL PETROLEUM CORP 3.9% 212 213 214 2 216 217 218 PHILLIPS 66 3.1% *based on twelve months' forward EPS (max value of 1) HALLIBURTON CO 2.9% VALERO ENERGY CORP 2. Other Fundamental Data KINDER MORGAN INC 2. TOTAL 72.% LT growth est. 18.% Payout ratio 96. Constituent Allocation Debt-to-equity.6x No. of constituents 32 Weighted avg mkt cap (mns) $138,46 Med mkt cap (mns) $,313 Large cap ( >$1bn) 96.9% Mid cap ($2-1bn) 3.1% Small cap ( <$2bn).% 212 214 216 218 11 1 9 9 8 8 7 7 Energy 217 AltaVista Research, LLC. All rights reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure
Financial Select Sector Index IXM AS OF 11/3/17 337.72 4 3 3 2 2 1 26 28 21 212 214 216 218 The Financial Select Sector Index is a modified cap-weighted index. The index isintended to track the movements of companies in the S&P that are involved in the development or production of financial products. This index was established with a value of 2 on June 3, 19. One year 24.% Five year 18.9% Ten year 3.% Since inception 4. *as of 11/3/17. See Notes. Beta vs. S&P 1.19 Standard deviation.. A rating of indicates that stocks in these indices. The majority of indices we cover fall into this category. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to- Book Value multiples. S&P SPECULATIVE 212 213 214 2 216 217E 218E CAGR Sales 112.4 111.38 112.99 1.42 12.9 12.36 129.31 2. Earnings 14.26 17.46 16.1 18.4 18.27 19.88 22.96 6.9% Book Value 17.9 181.76 192.61 196.6 26.17 221.21 23.76.3% Dividends 2.69 3.27 4.42 4.48 4.76. 6.3. Sales growth -.9% 1. 2.1% 4. 3.9% 3.1% EPS growth 22. -. 12. -1. 8.7%. Financials were a major drag on S&P earnings in Q3, and estimate revisions have turned south. Nonetheless investors seem to have high expectations--p/es are at multi-year highs--for higher interest rates, repeal of regulations like Dodd-Frank, and considerable improvement in margins and ROE for 218. Our ratings framework suggests Financials continue to look attractive vs the S&P. 11% 1% 1% 9% 9% 212 214 216 218 % 1% % % 212 214 216 218 14 12 1 96 94 92 217E 218E Price-to-Earnings 17. 14.7 Price-to-Cash Flow 18.6 16.3 Price-to-Sales 2.7 2.6 Price-to-Book Value 1. 1.4 2 Top 1 Constituents BERKSHIRE HATHAWAY INC-CL B 11.1% 1 JPMORGAN CHASE & CO 1.9% BANK OF AMERICA CORP 8.3% Insurance WELLS FARGO & CO 7.7% CITIGROUP INC 6. GOLDMAN SACHS GROUP INC 2.7% 212 213 214 2 216 217 218 US BANCORP 2.7% Banks *based on twelve months' forward EPS (max value of 1) MORGAN STANLEY 2. CHUBB LIMITED 2. Diversified Other Fundamental Data AMERICAN EXPRESS CO 2. TOTAL 6.% LT growth est. 1.% Payout ratio 27. Constituent Allocation Debt-to-equity 1.4x No. of constituents 67 Weighted avg mkt cap (mns) $17,928 Med mkt cap (mns) $16,947 Large cap ( >$1bn) 97.3% Mid cap ($2-1bn) 2.7% Small cap ( <$2bn).% 217 AltaVista Research, LLC. All rights reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure
Health Care Select Sector Index IXV AS OF 11/3/17 836. 9 8 7 6 4 3 2 1 26 28 21 212 214 216 218 The Health Care Select Sector Index is a modified capweighted index. The index is intended to track the movements of companies in the S&P that are involved in health care services. The index was established with a value of 2 on June 3, 19. One year 23. Five year 17.7% Ten year 1. Since inception 8.1% *as of 11/3/17. See Notes. Beta vs. S&P.94 Standard deviation 12.3% Above average appreciation potential relative to the S&P. A rating of indicates that stocks in this index are trading at attractive valuations and/or have above-average fundamentals. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to-Book Value multiples. S&P SPECULATIVE 212 213 214 2 216 217E 218E CAGR Sales 33.9 317.74 34.67 383. 419.9 444.9 467.27 8.% Earnings 31.12 31.68 36.62 4.9 44.3 46.9.9 8. Book Value 143.49 3.34 164.19 199.6 213.97 247.69 283.41 11.% Dividends 8.26 8.94 9.93 1.86 11.9 13.13 14.2 9.7% Sales growth 4. 11. 8. 9.3%..1% EPS growth 1.7%.% 1. 9.1%.9% 6. Revenue and EPS growth appear to be moderating as the initial boost from expanded insurance & Medicaid enrollment moderates, but the declines in Return on Equity from 214 thru 218E are a bigger cause for concern. That said, while valuations for the S&P continue to get richer, Health Care trades considerably below its peak of mid-2 (see P/E History below) earning the sector the highest rating of any Select Sector Index. 1 1% 14 12 217E 218E Price-to-Earnings 17.8 16.7 % Price-to-Cash Flow.8 14.1 1 Price-to-Sales 1.9 1.8 1% Price-to-Book Value 3.4 3. % % % 96 212 214 216 218 212 214 216 218 2 18 Top 1 Constituents 16 14 JOHNSON & JOHNSON 12.% 12 PFIZER INC 6.7% 1 UNITEDHEALTH GROUP INC 6. MERCK & CO. INC. 4. 8 ABBVIE INC 4. 6 Equip & AMGEN INC 4.1% 212 Svcs. 213 214 2 216 217 218 MEDTRONIC PLC 3.% *based on twelve months' forward EPS (max value of 1) BRISTOL-MYERS SQUIBB CO 3.3% GILEAD SCIENCES INC 3.1% Pharma & Other Fundamental Data ABBOTT LABORATORIES 2. Biotech TOTAL 1.3% LT growth est. 9.% Payout ratio 28.% Constituent Allocation Debt-to-equity.7x No. of constituents 62 Weighted avg mkt cap (mns) $129,894 Med mkt cap (mns) $19,731 Large cap ( >$1bn).7% Mid cap ($2-1bn) 1. Small cap ( <$2bn).1% 217 AltaVista Research, LLC. All rights reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure
Industrial Select Sector Index IXI AS OF 11/3/17 743. 8 7 6 4 3 2 1 26 28 21 212 214 216 218 The Industrial Select Sector index is a modified capitalizationweighted index. The index is intended to track the movements of companies in the S&P that are involved in industrial products and services. The index was established with a value of 2 on June 3, 19. One year 22.% Five year 17.% Ten year 9.1% Since inception 8. *as of 11/3/17. See Notes. Beta vs. S&P 1.4 Standard deviation 11.. A rating of indicates that stocks in these indices. The majority of indices we cover fall into this category. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to- Book Value multiples. S&P SPECULATIVE 212 213 214 2 216 217E 218E CAGR Sales 343.93 34.7 362.41 34.4 36.99 374.8 39.2 1.7% Earnings 26. 28.37 32.8 33.2 33.41 3.3 38.2.7% Book Value 13.8.29 143.78 134.33 14.36 16.8 189.4 4.9% Dividends 8.6 9.6 1.9 12.33 13.8 14.71 14.33 11.3% Sales growth 2.9% 2.3% -4. 4. 3..3% EPS growth 6. 13.1% 2.9% 1.1% 4. 9.9% A manufacturing renaissance--thanks to cheaper domestic energy and expectations for corporate tax reform--appears to be resulting in rising margins and faster long-term EPS growth expectations. However estimate revisions recently rolled over, a trend which bears watching. In any event the sector's rally has pushed valuation multiples to multi-year highs (see historical P/E), resulting in a ranking marginally below the S&P. 3% % 1% % % 212 214 216 218 1 1% % 212 214 216 218 16 14 12 1 96 94 217E 218E Price-to-Earnings 21.2 19.3 Price-to-Cash Flow 14.7 13.8 Price-to-Sales 2. 1.9 Price-to-Book Value 4. 3.9 2 2 Top 1 Constituents BOEING CO 6. 3M CO 6.% 1 GENERAL ELECTRIC CO.% Transport HONEYWELL INTERNATIONAL INC.% UNION PACIFIC CORP 4.3% UNITED TECHNOLOGIES CORP 3.9% 212 213 214 2 216 217 218 CATERPILLAR INC 3.7% Com. Svcs *based on twelve months' forward EPS (max value of 1) UNITED PARCEL SERVICE-CL B 3.% LOCKHEED MARTIN CORP 3.% Other Fundamental Data GENERAL DYNAMICS CORP 2. TOTAL 44. LT growth est. 1. Capital Payout ratio 42.% Goods Constituent Allocation Debt-to-equity 1.2x No. of constituents 68 Weighted avg mkt cap (mns) $7,221 Med mkt cap (mns) $13, Large cap ( >$1bn) 9.7% Mid cap ($2-1bn) 4.3% Small cap ( <$2bn).% 216 AltaVista Research, LLC. All rights reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure
Materials Select Sector Index IXB AS OF 11/3/17 628.84 7 6 4 3 2 1 26 28 21 212 214 216 218 The Materials Select Sector Index is a modified capitalizationweighted index. The index is intended to track the movements of companies in the S&P that are involved in basic industries. The index was established with a value of 2 on June 3, 19. One year 21. Five year 12.7% Ten year 6. Since inception 7. *as of 11/3/17. See Notes. Beta vs. S&P 1.33 Standard deviation 16.. A rating of indicates that stocks in these indices. The majority of indices we cover fall into this category. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to- Book Value multiples. S&P SPECULATIVE 212 213 214 2 216 217E 218E CAGR Sales 31.16 39. 36.14 327.2 321.72 394.79 416.18 2. Earnings 26.48 27.38 29.69 29.3 27.48 29.33 34. 2.1% Book Value 8.21 177.6 6.2 6.2 164.36 183.21 2.44 3.% Dividends 9.7 11.7 11.68 11.22 11.7 11.43 12.17 3.3% Sales growth 2. 1.7% -1. -1. 22.7%. EPS growth 3. 8. -2. -.3% 6.7% 17. Comparisons between forecasts and historical results may be distorted by the recent merger of DowDupont, which dominates the fund. Nonetheless abundant domestic petroleum supplies are spurring an investment boom among the chemical firms that comprise about 7% of the sector. That said these stocks still trade at evener rich multiples than the S&P making the sector slightly less attractive than the broader market in our view. 19% 19% 1 1 17% 17% 1 1 % 212 214 216 218 1% % 212 214 216 218 11 1 9 9 8 8 7 7 217E 218E Price-to-Earnings 21.4 18.2 Price-to-Cash Flow 13.1 11. Price-to-Sales 1.6 1. Price-to-Book Value 3.4 3.1 2 Top 1 Constituents DOWDUPONT INC 23.1% 1 MONSANTO CO 8.1% PRAXAIR INC 6.3% AIR PRODUCTS & CHEMICALS INC.3% ECOLAB INC. SHERWIN-WILLIAMS CO/THE.% 212 213 214 2 216 217 218 PPG INDUSTRIES INC 4. *based on twelve months' forward EPS (max value of 1) LYONDELLBASELL INDU-CL A 4. INTERNATIONAL PAPER CO 3.7% Other Fundamental Data NEWMONT MINING CORP 3.% TOTAL 68. LT growth est. 9.7% Payout ratio 39.% Constituent Allocation Debt-to-equity 1.1x No. of constituents 2 Weighted avg mkt cap (mns) $4,944 Med mkt cap (mns) $11,63 Large cap ( >$1bn) 93.7% Mid cap ($2-1bn) 6. Small cap ( <$2bn).% Materials 217 AltaVista Research, LLC. All rights reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure
Real Estate Select Sector Index IXRE AS OF 11/3/17 16.99 2 17 The Real Estate Select Sector Index is a modified capweighted index. The index isintended to track the movements of Real Estate Investment Trusts in the S&P, 12 excluding Mortgage REITs. This index was established with a 1 value of 147.88 on August 17, 2. 7 2 Aug- Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 One year 16.3% Five year n/a Ten year n/a Since inception n/a *as of 11/3/17. See Notes. Beta vs. S&P 1.9 Standard deviation 12.7%. A rating of indicates that stocks in these indices. The majority of indices we cover fall into this category. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to- Book Value multiples. S&P SPECULATIVE 212 213 214 2 216 217E 218E CAGR Sales 17.4 19.44 2.69 22.4 23.8 2.31 26.9 8. Earnings.46 6. 6.81 7.36 7.97 8.17 8.72 8. Book Value 36. 42.3 43.41 4.24.44 3.4 6.31 8.1% Dividends 3. 3.1 4.4 4.78.97.27.49 1. Sales growth 14.1% 6. 6.% 6.9% 7.3% 6. EPS growth 1.7% 12. 7.9% 8. 2.% 6.7% Profits (based on funds from operations) are forecast to grow less than 3% this year and 7% next year--both below trend line--while distributions are forecast to decline after some special payouts in 216, putting the sector's yield on par with that of Utilities. Meanwhile REITs trade near the bottom of their range for the past few years of between 17x-21x earnings as the prospect of higher interest rates casts a shadow over the sector. % 1% % % 212 214 216 218 3% 3% % 1% % % 212 214 216 218 18 16 14 12 1 96 217E 218E Price-to-Earnings 19.7 18. Price-to-Cash Flow 18.8 17.9 Price-to-Sales 6.4 6. Price-to-Book Value 3. 2.9 2 2 Top 1 Constituents AMERICAN TOWER CORP-CL A 9.% SIMON PROPERTY GROUP INC 7. 1 CROWN CASTLE INTL CORP 6.7% EQUINIX INC. PROLOGIS INC.3% PUBLIC STORAGE 4. 212 213 214 2 216 217 218 WEYERHAEUSER CO 4. *based on twelve months' forward EPS (max value of 1) AVALONBAY COMMUNITIES INC 3.9% EQUITY RESIDENTIAL 3. Other Fundamental Data Real Estate WELLTOWER, INC. 3. TOTAL 4.9% LT growth est. 8. Payout ratio 64. Constituent Allocation Debt-to-equity 1.4x No. of constituents 33 Weighted avg mkt cap (mns) $26,49 Med mkt cap (mns) n/a Large cap ( >$1bn) 87.1% Mid cap ($2-1bn) 12.9% Small cap ( <$2bn).% 217 AltaVista Research, LLC. All rights reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure
Technology Select Sector Index IXT AS OF 11/3/17 639.76 7 6 4 3 2 1 26 28 21 212 214 216 218 The Technology Select Sector Index is a modified capweighted index. The index is intended to track the movements of companies in the S&P that are involved in the development or production of technology products. The index was established with a value of 2 on June 3, 19. One year 37.% Five year 19. Ten year 11.3% Since inception.% *as of 11/3/17. See Notes. Beta vs. S&P 1.16 Standard deviation 13.. A rating of indicates that stocks in these indices. The majority of indices we cover fall into this category. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to- Book Value multiples. S&P SPECULATIVE ALTAR Scores 212 213 214 2 216 217E 218E CAGR Sales 118.31 122.64 128.99 146.22 2. 162.11 176.19 6.% Earnings 2.63 21.41 22. 2.99 27.23 31.9 34.9 8.% Book Value 92.74 13.27 13.4 111.22 113.84 136.16 16.3 8.% Dividends.2 6.96 7.27 8. 8.84 9.2 1.18 11.% Sales growth 3..1% 13.3% 3.9% 6. 8. EPS growth 3.7% 7.3% 13.% 4.7% 14.1% 12. The massive Tech rally this year has pushed valuations well above their range of the past few years (see P/E history below), in turn diminishing future appreciation potential to average in our opinion. And with tax reform perhaps set to benefit other sectors more, there could be some sector rotation going on. That said, the sector's margins and ROE remain exceptionally high with long-term EPS growth expectations modestly better than the S&P overall. 3% % 1% % % 212 214 216 218 % 1% % % 212 214 216 218 16 12 94 217E 218E Price-to-Earnings 2.6 18.3 Price-to-Cash Flow 14.9 13.3 Price-to-Sales 4. 3.6 Price-to-Book Value 4.7 4. 2 Top 1 Constituents APPLE INC 14.9% MICROSOFT CORP 11.% Telecom Semis 1 FACEBOOK 7.3% ALPHABET INC. CLASS A.3% ALPHABET INC. CLASS C. Hardware INTEL CORP 3.7% 212 213 214 2 216 217 218 AT&T INC 3.% *based on twelve months' forward EPS (max value of 1) VISA INC-CLASS A SHARES 3.% CISCO SYSTEMS INC 2.9% Other Fundamental Data VERIZON COMMUNICATIONS INC 2. TOTAL 6.% LT growth est. 1.7% Payout ratio 3. Constituent Allocation Debt-to-equity.6x No. of constituents 72 Weighted avg mkt cap (mns) $42,6 Med mkt cap (mns) $13,718 Large cap ( >$1bn) 99.1% Mid cap ($2-1bn) 1.% Small cap ( <$2bn).% 217 AltaVista Research, LLC. All rights reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure Software
Utilities Select Sector Index IXU AS OF 11/3/17 69. 6 4 3 2 1 26 28 21 212 214 216 218 The Utilities Select Sector Index is a modified capitalizationweighted index. The index is intended to track the movements of companies in the S&P that are utilities. The index was established with a value of 2 on June 3, 19. One year 2.3% Five year 14.1% Ten year 7.% Since inception 6.9% *as of 11/3/17. See Notes. Beta vs. S&P.11 Standard deviation 12.. A rating of indicates that stocks in these indices. The majority of indices we cover fall into this category. The rating is based on a proprietary scoring system that analyzes metrics such as Return on Equity and Price-to- Book Value multiples. S&P SPECULATIVE 212 213 214 2 216 217E 218E CAGR Sales 247.8 24.9 27.3 26.16 26.16 27.68 279.78 1. Earnings 26.1 26.24 27.38 27.31 29. 29.2 3.6 2.% Book Value 237.9 2.24 29. 262.99 269.87 28.99 291.72 3. Dividends.61.9 16.13 16.73 17.2 18. 19.9 3.% Sales growth 2. 8. -.%.% 4.% 3.3% EPS growth -1.% 4.3% -. 6.1%. 4. Utilities are trading at their peak valuations (and low yields) for at least the last five years, despite the threat of a normalization in interest rates, perhaps reflecting less onerous environmental regulations under the Trump administration. Longer term we think distributed generation and improved battery technology remain bigger threats to Utilities' profitability. Net/net the sector appears slightly less attractive than the S&P. 1 1 1% % 212 214 216 218 1 1% % 212 214 216 218 16 12 94 217E 218E Price-to-Earnings 19. 18.6 Price-to-Cash Flow 8.4 7.9 Price-to-Sales 2.1 2. Price-to-Book Value 2. 2. 2 Top 1 Constituents NEXTERA ENERGY GROUP 1. DUKE ENERGY CORP 8. 1 SOUTHERN CO 7.% DOMINION RESOURCES INC/VA 7.% EXELON CORP.% AMERICAN ELECTRIC POWER.3% 212 213 214 2 216 217 218 P G & E CORP 4.3% *based on twelve months' forward EPS (max value of 1) SEMPRA ENERGY 4.3% CONSOLIDATED EDISON INC 3.9% Other Fundamental Data EDISON INTERNATIONAL 3. TOTAL 6.% LT growth est. 4.7% Payout ratio 63. Constituent Allocation Debt-to-equity 1.4x No. of constituents 28 Weighted avg mkt cap (mns) $34,272 Med mkt cap (mns) $11,737 Large cap ( >$1bn) 92.7% Mid cap ($2-1bn) 7.3% Small cap ( <$2bn).% Utilities SEL2927 Exp 1/31/18 217 AltaVista Research, LLC. All rights reserved. This report is provided for informational purposes only, and AltaVista makes no warranties with respect to its accuracy. See Disclosure