Global Index Briefing: Emerging Markets Latin America MSCI April 4, 2018 Dr. Ed Yardeni 516-972-7683 eyardeni@ Joe Abbott 732-497-5306 jabbott@ Please visit our sites at www. blog. thinking outside the box
Table Of Contents Table Of Contents Emerging Markets Latin America MSCI Stock Price Index 1 Blue Angels Forward Earnings and Valuation 2 Earnings 3 Revenues 4 NERI & Margins 5 Earnings Growth & Valuation 6 April 4, 2018 / Global Index Briefing: Emerging Markets Latin America MSCI www.
Stock Price Index 750 8750 Figure 1. EMERGING MARKETS LATIN AMERICA MSCI INDEX (ratio scale) 4/4 6500 5500 6750 Local currency 4500 4750 US$ 3500 2500 2750 1500 750 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: MSCI. 500 1.0.9 Figure 2. EMERGING MARKETS LATIN AMERICA MSCI INDEX CURRENCY RATIO (US$ index / local currency index) 1.0.9.8.8.7.7.6.6.5.5.4.3 4/4.4.3.2 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: MSCI..2 Page 1 / April 4, 2018 / Global Index Briefing: Emerging Markets Latin America MSCI www.
12500 100 9500 Figure 3. Blue Angels Forward Earnings and Valuation EMERGING MARKETS LATIN AMERICA MSCI, FORWARD EARNINGS, & VALUATION (in local currency) Emerging Markets Latin America MSCI Index 04/04/18 Blue Angels Implied Price Index* 03/30/18 x14 12500 100 9500 8000 8000 6500 x 6500 5000 5000 3500 x6 3500 2000 2007 2008 2009 20 2011 2012 2013 2014 2015 2016 2017 2018 2019 2000 * Implied price index calculated using forward earnings times forward P/Es. Monthly through December 2005, weekly thereafter. Source: MSCI and Thomson Reuters I/B/E/S. 7200 6200 5200 Figure 4. EMERGING MARKETS LATIN AMERICA MSCI, FORWARD EARNINGS, & VALUATION (in US$) Emerging Markets Latin America MSCI Index 04/04/18 Blue Angels Implied Price Index* 0/18 7200 6200 5200 4200 4200 3200 x14 3200 2200 x 2200 1200 x6 1200 200 2007 2008 2009 20 2011 2012 2013 2014 2015 2016 2017 2018 2019 200 * Implied price index calculated using forward earnings times forward P/Es. Monthly through December 2005, weekly thereafter. Source: MSCI and Thomson Reuters I/B/E/S. Page 2 / April 4, 2018 / Global Index Briefing: Emerging Markets Latin America MSCI www.
Earnings 975 825 675 Figure 5. EMERGING MARKETS LATIN AMERICA MSCI EARNINGS PER SHARE (in local currency) (analysts average forecasts, ratio scale) 17 18 19 3/30 975 825 675 525 525 375 375 225 225 Forward earnings* 75 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20 2011 2012 2013 2014 2015 2016 2017 2018 2019 75 * Time-weighted average of consensus estimates for current year and next year. Monthly through December 2005, then weekly. 560 5 460 4 360 3 Figure 6. EMERGING MARKETS LATIN AMERICA MSCI EARNINGS PER SHARE (in US$) (analysts average forecasts, ratio scale) 560 5 460 4 360 3 260 19 260 2 17 18 2 160 160 1 Forward earnings* 1 60 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20 2011 2012 2013 2014 2015 2016 2017 2018 2019 60 * Time-weighted average of consensus estimates for current year and next year. Monthly through December 2005, then weekly. Page 3 / April 4, 2018 / Global Index Briefing: Emerging Markets Latin America MSCI www.
9000 8000 Revenues Figure 7. EMERGING MARKETS LATIN AMERICA MSCI REVENUES PER SHARE (in local currency) (analysts average forecasts, ratio scale) 18 17 19 3/30 9000 8000 7000 7000 6000 6000 5000 5000 4000 Forward revenues* 4000 3000 2004 2005 2006 2007 2008 2009 20 2011 2012 2013 2014 2015 2016 2017 2018 2019 3000 * Time-weighted average of consensus estimates for current year and next year. Monthly through December 2005, then weekly. 5200 4700 4200 3700 Figure 8. EMERGING MARKETS LATIN AMERICA MSCI REVENUES PER SHARE (in US$) (analysts average forecasts, ratio scale) 5200 4700 4200 3700 3200 3200 2700 17 18 19 2700 2200 2200 1700 Forward revenues* 1700 1200 2004 2005 2006 2007 2008 2009 20 2011 2012 2013 2014 2015 2016 2017 2018 2019 1200 * Time-weighted average of consensus estimates for current year and next year. Monthly through December 2005, then weekly. Page 4 / April 4, 2018 / Global Index Briefing: Emerging Markets Latin America MSCI www.
15 Figure 9. NERI & Margins EMERGING MARKETS LATIN AMERICA MSCI INDEX NET EARNINGS REVISIONS* 15 5 5 0 Mar 0-5 -5 - - -15-15 -20-25 -30 NERI Jan 0.03 Feb -0.24 Mar -0.23 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20 2011 2012 2013 2014 2015 2016 2017 2018 2019-20 -25-30 * Three-month moving average of the number of forward earnings estimates up less number of estimates down, expressed as a percentage of the total number of forward earnings estimates. 16 14 12 Figure. EMERGING MARKETS LATIN AMERICA MSCI PROFIT MARGIN (using analysts average earnings and revenues forecasts) Forward profit margin* (8.7) 16 14 12 8 17 18 19 8 6 6 4 2004 2005 2006 2007 2008 2009 20 2011 2012 2013 2014 2015 2016 2017 2018 2019 4 * Time-weighted average of the consensus estimates for current year and next year. Monthly through December 2005, weekly thereafter. Page 5 / April 4, 2018 / Global Index Briefing: Emerging Markets Latin America MSCI www.
70 60 Figure 11. Earnings Growth & Valuation EMERGING MARKETS LATIN AMERICA MSCI STEG, STRG, & LTEG (percent) 70 60 50 40 LTEG* (16.4) STEG* (16.1) STRG* (6.4) 50 40 30 30 20 20 0 0-2006 2007 2008 2009 20 2011 2012 2013 2014 2015 2016 2017 2018 2019 Note: STEG is year-ahead forward consensus expected short-term earnings growth. STRG is year-ahead forward consensus expected short-term revenue growth. LTEG is five-year consensus expected long-term earnings growth. - 20 Figure 12. EMERGING MARKETS LATIN AMERICA MSCI VALUATION 20 15 Forward P/E* (13.3) 15 5 2.5 2.0 1.5 Relative P/E** (0.9) PEG Ratio*** (0.8) 5 2.5 2.0 1.5 1.0.5 1.0.5.0 PEG capped at 2.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20 2011 2012 2013 2014 2015 2016 2017 2018 2019.0 * Price divided by forward consensus expected operating earnings per share. Monthly through December 2005, then weekly. ** Forward P/E relative to MSCI World forward P/E. *** Forward P/E relative to consensus 5-year LTEG forecast. Page 6 / April 4, 2018 / Global Index Briefing: Emerging Markets Latin America MSCI www.
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